President Joe Biden has now formally delivered public remarks in regards to the collapse of Silicon Valley Financial institution, providing a stark distinction between the enterprise capitalists who concern mongered within the days after its failure.

“Individuals can trust that the banking system is protected,” Biden mentioned(Opens in a brand new tab) on Monday, three days after the biggest financial institution collapse since 2008. “Your deposits will probably be there while you want them.”

Biden echoed the assure that the Treasury Division, Federal Reserve and FDIC made on Sunday(Opens in a brand new tab): All of Silicon Valley Financial institution’s depositors will probably be made entire and have entry to all their cash, even what’s past the FDIC-insured $250,000. Mainly, any particular person buyer or enterprise consumer of the financial institution may have full entry to everything of their funds.

As well as, the president mentioned that the cash for depositors wouldn’t be funded by the taxpayer.

“No losses will probably be born by the taxpayers,” he mentioned. “As a substitute the cash will come from the charges that banks pay into the Deposit Insurance coverage Fund.”

As for financial institution shareholders and traders, Biden emphasised that there can be no bailout for them.

“Buyers within the banks won’t be protected,” the president mentioned. “They knowingly took a danger and when the danger did not repay, traders lose their cash. That is how capitalism works.”

Silicon Valley Financial institution’s points started after saying the corporate wanted to boost billions of {dollars} in capital on Wednesday. The announcement brought on panic within the tech trade. Founders and VCs who had been clients of the financial institution finally sparked a financial institution run with tens of billions of {dollars} being withdrawn from the financial institution.

Biden provided a stark distinction to the apocalyptic situations that some tech VCs had been posting about on social media over the previous few days. 

“The place is Powell? The place is Yellen?” enterprise capitalist and Elon Musk affiliate David Sacks posted(Opens in a brand new tab) on Friday, referring to Federal Reserve chair Jerome Powell and U.S. Secretary of treasury Janet Yellen. “Cease this disaster NOW. Announce that each one depositors will probably be protected. Place SVB with a High 4 financial institution. Do that earlier than Monday open or there will probably be contagion and the disaster will unfold.”

“YOU SHOULD BE ABSOLUTELY TERRIFIED RIGHT NOW  — THAT IS THE PROPER REACTION TO A BANK RUN & CONTAGION,” tweeted(Opens in a brand new tab) Jason Calacanis, a VC and Sacks’ podcast co-host. “@POTUS & @SecYellen MUST GET ON TV TOMORROW AND GUARANTEE ALL DEPOSITS UP TO $10M OR THIS WILL SPIRAL INTO CHAOS.”

Silvergate, Signature Financial institution collapse not an indication of ‘contagion’

Some pointed to current financial institution closures like Silvergate(Opens in a brand new tab) and Signature Financial institution(Opens in a brand new tab), which was taken over by regulators on Sunday, as proof of a spreading drawback.

Nonetheless, Silvergate shut down days earlier than Silicon Valley Financial institution. As well as, each Silvergate and Signature Financial institution had well-known, lingering points for months associated to the cryptocurrency-friendly nature of these two now-failed banks. And, in accordance with Biden, depositors from these banks will probably be made entire as properly.

Financial institution shares plunged in the marketplace on Monday. Nonetheless, among the hardest hit on the inventory market, like First Republic Financial institution, informed CNBC(Opens in a brand new tab) that they’re simply not seeing that many depositors withdraw their funds.

Whereas the mud has removed from settled, one factor we have not seen: On a regular basis Individuals lining up at their native banks, attempting to withdraw all of their cash as some VCs warned.

In keeping with the Federal Reserve, the median(Opens in a brand new tab) account steadiness for the typical family within the U.S. is $5,300 – properly inside the as much as $250,000 insured by the FDIC.