alerts & publications
Uninsured Deposits at SVB and Signature Bank to be SafeguardedMarch 12, 2023
See our related alert, SVB Shutdown: Where We Are and What to Expect Next.
This afternoon, Treasury Secretary Yellen, Federal Reserve Board Chair Powell, and FDIC Chairman Gruenberg jointly announced that all deposits held at SVB, which was shut down by California Department of Financial Protection and Innovation on March 10, 2023, and at Signature Bank, which was closed earlier today by the New York State Department of Financial Services, would be safeguarded in a manner fully protecting all depositors.
The announcement ensures that all depositors of the two institutions will be made whole. The government indicated that it was relying on the systemic risk exception in taking these measures to limit potential contagion.
The government further announced that shareholders and certain unsecured debtholders of SVB and Signature would not be protected.
Separately, the Federal Reserve Board announced this afternoon that it would make available additional funding to other eligible depositary institutions to help ensure depositors’ needs would be met.
O’Melveny will continue to monitor developments in the wake of SVB’s failure and keep clients apprised.
This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Jarryd E. Anderson, an O’Melveny partner licensed to practice law in the District of Columbia, New Jersey, New York, and Pennsylvania, Ike Chidi, an O’Melveny partner licensed to practice law in California, C. Brophy Christensen, an O’Melveny partner licensed to practice law in California, Peter Friedman, an O’Melveny partner licensed to practice law in the District of Columbia, Elizabeth L. McKeen, an O’Melveny partner licensed to practice law in California, Pamela A. Miller, an O’Melveny partner licensed to practice law in New York, Danielle Morris, an O’Melveny partner licensed to practice law in California, and Jonathan Rosenberg, an O’Melveny partner licensed to practice law in New York, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.
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