Yellen, alongside the Federal Deposit Insurance Corporation and Federal Reserve, announced Sunday that all uninsured depositors who held accounts at the now-defunct Silicon Valley Bank (SVB) and Signature Bank would be fully covered, adding that "decisive actions" were needed to "protect the U.S. economy." SVB was particularly popular among Chinese tech startups, as it provided easy access to U.S. investor funding, CNBC reported.
SVB's stock collapsed last week amid numerous customer bank runs following the institution's disclosure of a $1.8 billion net loss on asset sales on the back of high interest rates, forcing regulators to shut down the bank. Just two days later, Signature Bank, a premier lender in the crypto space, was closed by regulators due to "systemic risks," CNBC reported.
A bailout of uninsured depositors at the collapsed banks benefits the Chinese Communist Party at taxpayers' expense and could lead to stricter regulatory controls that smaller U.S. banks would be unable to withstand, experts told the DCNF.