US rushes to contain SVB fallout, Biden vows to fix mess

By Michael Mathes with Thomas Urbain in New York

WASHINGTON—US authorities unveiled sweeping measures Sunday to ease fears over the health of the banking system following the failure of Silicon Valley Bank, as regulators took over a second troubled lender.

Regulators stepped in to ensure depositors still had access to their funds at SVB and promised other institutions help in meeting customers’ needs after markets were rattled by the bank’s sudden collapse.

In Britain, banking giant HSBC bought SVB’s UK division for just £1 ($1.2) in a rescue deal overseen by the Bank of England and the government.

Amid fears over the wider sector, President Joe Biden vowed to hold “fully accountable” the people responsible for “this mess” and said he would deliver remarks on Monday morning on maintaining a resilient banking system.

“The American people and American businesses can have confidence that their bank deposits will be there when they need them,” Biden said.

In a joint statement, financial agencies including the US Treasury said SVB depositors would have access to “all of their money” starting Monday and that American taxpayers will not have to foot the bill.

The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and Treasury added that depositors in Signature Bank, a New York-based regional-size lender with significant cryptocurrency exposure which was shuttered on Sunday after its stock price tanked, would also be “made whole.”

The Fed also announced it would make extra funding available to banks to help them meet the needs of depositors, which would include withdrawals.

“We are taking decisive actions to protect the US economy by strengthening public confidence in our banking system,” the statement said.

“The US banking system remains resilient and on a solid foundation,” due in large part to reforms and banking industry safeguards undertaken after the financial crisis of 2008, they added.

“Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.”

Avoiding ‘contagion’

The FDIC move guarantees deposits -- but

A customer stands outside of a shuttered Silicon Valley Bank headquarters on March 10, 2023, in Santa Clara, California. AFP only up to $250,000 per client and per bank.

Federal banking law, however, would allow the FDIC to protect uninsured deposits if a failure to do so would pose systemic risks, the Washington Post reported.

Regulators on Friday took control of SVB -a key lender to startups across the United States since the 1980s -- after a huge run on deposits left the medium-sized bank unable to stay afloat on its own.

Hours before Sunday’s joint statement, Treasury Secretary Janet Yellen said the government wants to avoid financial “contagion” from the SVB implosion, as it ruled out a bailout.

With the bank’s future, and its billions in deposits up in the air, officials from the three agencies raced to craft a solution just hours before financial markets opened in Asia, and to avert a potential financial panic. AFP

BEIJING—China’s new Premier Li Qiang warned Monday it would be “no easy task” for the country to hit its annual growth target, already one of Beijing’s lowest in decades.

“I’m afraid that reaching our growth target of around five percent will be no easy task, and will require that we redouble our efforts,” Li said at a press conference in the Chinese capital.

The modest figure “has been determined after a comprehensive consideration of various factors”, Li said in front of assembled domestic and international media as the annual meeting of China’s rubber-stamp parliament drew to a close.

He warned of “many new challenges” to growth, but added that he thought most people “don’t fix their sights every day” on China’s GDP figures.

Instead, they care more about “specific issues close to them” such as housing, employment, income, education and health, he said.

Li, one of newly reanointed President Xi Jinping’s closest allies, was confirmed as premier on Saturday in a nearly unanimous vote during a meeting of the National People’s Congress.

He has taken over from Li Keqiang, who served in the position during Xi’s first decade in power.

Before handing the reins to his successor and near-namesake, Li Keqiang announced at the opening of the NPC that China would aim to grow its GDP by “around five percent” this year.

The world’s second-largest economy expanded by just three percent last year, one of its weakest performances in decades, as Covid curbs and a grinding property crisis chipped away at economic vitality. AFP