SVB's Chinese depositors will get their money back as part of U.S. intervention plan
Silicon Valley Bank and Signature Bank failed last Friday and Sunday, respectively.
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Treasury Secretary Janet Yellen confirmed this week that Chinese depositors with Silicon Valley Bank will have their deposits fully insured as part of the government's intervention in the bank's collapse.
Testifying before the Senate Finance Committee, Yellen fielded questions from Oklahoma Republican Sen. James Lankford, who asked whether banks is Oklahoma would pay fees to help remunerate SVB's Chinese investors.
"Uninsured investors will be made whole in that bank," Yellen confirmed, per the Washington Times. "I suppose that could include foreign depositors, but I don’t believe there’s any legal basis to discriminate among [the] uninsured."
Silicon Valley Bank and Signature Bank failed last Friday and Sunday, respectively. The industry volatility has spelled trouble for other financial institutions, such as First Republic, which received a rescue plan of $30 billion from other banks. Across the ocean, major firms such as Credit Suisse have struggled to cope with the turmoil.
The administration's plan involves using the Federal Deposit Insurance Corporation (FDIC) to insure SVB's depositors beyond the normal threshold of $250,000 and to guarantee their entire deposits.
As the existing FDIC reserve appears to fall short of the necessary amount to guarantee the bank's completely, the insurer will levy a special assessment on banks to make up the difference. Yellen has promised that taxpayers will not bear the financial burden of the plan, though Lankford appeared skeptical of that declaration.
"I’m sure my bankers are going to be very excited to know they are no longer paying taxes and their banks no longer pay taxes," he told the Treasury secretary. "All banks make their revenue off of rates and fees and such to their account holders, which means every Oklahoman will pay higher fees in their community banks."
SVB had $13.9 billion in foreign deposits, much of which came from Chinese startups, per the Times.
Ben Whedon is an editor and reporter for Just the News. Follow him on Twitter.