Biden promises to protect SVB, Signature depositors

The overnight failure of two large conventional banks, Silicon Valley Bank (SVB) and Signature Bank, precipitated a chain of events that affected millions of companies, venture capitalists, and bottom-line investors.

Nonetheless, President of the United States Joseph Biden told taxpayers that they would not feel the heat as the federal government took measures to safeguard depositors.

Several stablecoins, such as USD Coin, USDD (USDD), and Dai, decoupled from the U.S. dollar on March 11 when Circle disclosed that $3.3 billion of its $40 billion holdings were trapped in SVB.

On March 12, Biden indicated his intention to hold accountable those responsible for the disaster, knowing that several other companies connected to the collapse of the banks may suffer irreparable harm.

Although the proactive response of the federal government to avoid harm was praised, many pointed out that the taxpayers would eventually foot the bill for the depositors’ rescue.

After government action, Biden assured the American people that the conventional banking system was secure. He also asserted that safeguarding SVB and Signature Bank depositors would not impact taxpayers:

“People’s deposits will be there when they need them – at no cost to the taxpayer.”

Several of Biden’s Twitter followers, however, reminded him that “everything you touch or do costs the taxpayer!”

In parallel, the U.S. Federal Reserve is conducting a thorough investigation into the causes of SVB’s downfall, including how it supervised and controlled the now-defunct financial institution.

As previously reported, the California Department of Financial Protection and Innovation shut down SVB on March 10, without providing a particular cause for the bank’s shutdown.

Yet, it is believed that SVB was on the verge of insolvency as a result of acute liquidity issues caused by significant losses on government bond investments and extraordinary cash withdrawals.