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Amid a series of developments following the closure of Silicon Valley Bank on Friday, ICBA said it is ensuring the community banking voice is being heard while it reminded consumers they can bank with confidence at a community bank.
Silicon Valley Bank Closure: The FDIC on Friday morning announced the closure of Silicon Valley Bank in Santa Clara, Calif., and said the agency created the Deposit Insurance National Bank of Santa Clara to protect insured depositors. Silicon Valley Bank had $213 billion in assets as of Dec. 31 and was the 16th largest bank in the country at the time of its closure. SVB experienced rapid asset growth of 215% between year-end 2019 and 2022.
CEO Message: In a message to community bankers on Sunday, ICBA President and CEO Rebeca Romero Rainey said consumers and small businesses should understand the industry’s stability and resiliency. She provided talking points community bankers can use for communicating with customers and cited ICBA efforts to ensure the industry is well-represented with policymakers and accurately characterized in the media.
ICBA Statements: In a news release following the bank closure on Friday, Romero Rainey reminded consumers that no one has ever lost a penny of FDIC-insured funds and that the community banking industry remains safe, sound, and secure. In a separate news release Sunday, Romero Rainey said community banks operate under an entirely different business model than the nation’s largest banks and that ICBA would vehemently oppose community banks bearing any financial responsibility for potential losses to the FDIC Deposit Insurance Fund.
Joint Statement: On Sunday, the Treasury Department, FDIC, and Federal Reserve issued a joint statement on additional developments.
The FDIC will complete its resolution of Silicon Valley Bank in a manner that fully protects all depositors.
A similar systemic risk exception will apply to Signature Bank of New York, which was closed Sunday by the New York Department of Financial Services. The FDIC said it will operate Signature Bridge Bank as it markets the institution to potential bidders. As of Dec. 31, Signature Bank had approximately $110.36 billion in total assets and $88.59 billion in total deposits.
The agencies said all depositors will be made whole, shareholders and certain unsecured debtholders will not be protected, no losses will be borne by taxpayers, and any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks.
Bank Term Funding Program: The Federal Reserve Board separately announced that it will make available additional funding to eligible depository institutions to help ensure banks can meet the needs of all their depositors. The program:
Will offer loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets will be valued at par.
Will serve as an additional source of liquidity against high-quality securities, eliminating an institution’s need to quickly sell those securities in times of stress.
Will be funded with up to $25 billion from the Exchange Stabilization Fund as a backstop, though the Fed said it does not anticipate drawing on these backstop funds will be needed.
Outlook: ICBA will continue educating the public about the stability of the community banking industry and its time-tested business model while opposing any community bank financial responsibility for losses to the DIF.