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1 1 (March 21, 2023)

handle is hein.crs/govekyo0001 and id is 1 raw text is: Congressional ____ '.Research Service Silicon Valley Bank and Signature Bank Failures March 21, 2023 This Insight discusses the sudden failure of two large banks-Silicon Valley Bank (SVB) and Signature Bank-and the policy issues raised by their failure. Although the available information is preliminary, some policy insights can be gleaned from what is known so far. For background on banking regulation, see CRS In Focus IF 10035, Introduction to Financial Services: Banking. Failures and Resolution On March 10, 2023, the California Department of Financial Protection and Innovation closed SVB. The state agency appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. Failing insured depositories are subject to FDIC resolution instead of the bankruptcy process. At the time of closure, SVB was the 16th largest U.S. bank, with 17 branches in California and Massachusetts and around $209 billion in assets and $175 billion in deposits as of year-end 2022. The FDIC established a bridge bank, Silicon Valley Bridge Bank, N.A., to which it transferred all SVB's insured and uninsured deposits. SVB was reportedly the second largest bank failure ever if measured in nominal dollars. On March 12, the New York State Department of Financial Services closed Signature Bank and appointed the FDIC as receiver. Signature Bank was the 29th largest bank, with total assets of $110.4 billion and total deposits of $88.6 billion as of December 31, 2022, and had 40 branches in New York, California, Connecticut, North Carolina, and Nevada. The FDIC formed a second bridge bank, Signature Bridge Bank, N.A., and similarly transferred Signature's deposits and assets to it. In these resolutions, the FDIC is not using its typical purchase and assumption method, where the failed bank (or at least its desirable parts) is immediately sold to a competitor. The FDIC uses a bridge bank when there is insufficient time to market the institution for sale before closing. The bridge bank can maintain normal operations until a resolution is found-typically, a sale of the bank to another bank. The FDIC invoked, subject to the approval of the Treasury Secretary and the Fed, a systemic risk exception to least-cost resolution (12 U.S.C. @1823(c)(4)(G)) that enabled it to guarantee all uninsured deposits. (Deposits are insured up to a legal limit, typically $250,000.) Both SVB ($151.6 billion) and Signature ($79.5 billion) reported large estimated uninsured deposits on their last call reports. Typically, uninsured deposits are not guaranteed (although they may ultimately be made whole) to ensure least-cost Congressional Research Service https://crsreports.congress.gov IN12125 CRS INSIGHT Prepared for Members and Committees of Congress

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