Has the financial crisis been prevented? Feds tell depositors at failed banks you will get your money

After the failure of Silicon Valley Bank and then Signature Bank of New York, which invested in cryptocurrencies, the Treasury Department and banking regulators are now promising depositors that they will have access to all their funds when branches open today.

The Feds took action after the damage from the second-largest bank failure in US history began to cause panic and ripples around the world.

“I think without it, there could have been some serious runs on other banks,” said William Cohen, founding partner of the news website Puck, “because there would have been a loss of confidence in the whole system.”

The turmoil began Wednesday when Silicon Valley Bank, a major lender to the troubled technology industry, tried to sell assets to shore up its balance sheet after losing money on bond investments when the Federal Reserve raised interest rates.

That sent investors into a panic as clients rushed to withdraw funds after seeing the news on social media.

The feds swooped in, tying up $150 billion in deposits and putting some banks and tech companies at risk.

Treasury Secretary Janet Yellen says the emergency measures are not a bailout because the funds will come from the FDIC account, a pool of money paid by US banks.

“We are concerned about depositors and are focused on trying to meet their needs,” said Yellen.

But while bank depositors will be protected, stocks and bondholders will not.

The crisis had already spread to Britain, where Silicon Valley Bank had a subsidiary.

The UK Treasury and the Bank of England “facilitated the sale of Silicon Valley Bank UK” to HSBC and ensured the safety of deposits.

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