Which rules Silicon valley and signature bank violated?

On Sunday, U.S. banking regulators implemented new policies that will safeguard all customer deposits while erasing equity and bondholders in Silicon Valley Bank and Signature Bank of New York.

A senior U.S. Treasury official clarified that these measures were taken to stabilize the financial system and shield depositors, and not to provide a bailout to either bank.

A combination of factors, including poor risk management and a bank run driven by tech industry investors, led to the collapse of Silicon Valley Bank (SVB).

On March 10, examiners from the Federal Reserve and the FDIC assessed the company's finances, and a few hours later, the California Department of Financial Protection and Innovation (DFPI) took possession of SVB, citing inadequate liquidity and insolvency.

The FDIC was then appointed as the receiver and established a deposit insurance national bank, the Deposit Insurance National Bank of Santa Clara, to reopen the bank's branches the following Monday and enable access to insured deposits.

Following the closure of SVB by regulators, according to Reuters, the CEO of Silicon Valley Bank, Greg Becker, who was previously on the board of directors at the Federal Reserve Bank of San Francisco, stepped down from that position.

Despite these actions, investor concerns continued to mount. The situation was compounded by the recent closures of Silvergate Capital Corp. and Silicon Valley Bank, which were also banks heavily involved in the crypto industry.

Investigate and bring enforcement actions law

Gary Gensler, the chair of the Securities and Exchange Commission, has pledged to investigate and take legal action in cases where federal securities laws are violated.

Investigating and bringing enforcement actions are legal processes used by government agencies to enforce laws and regulations. These processes are often used to ensure compliance with laws related to various fields, such as finance, securities, antitrust, and environmental protection.

In the finance industry, regulatory agencies like the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) investigate potential violations of securities laws, such as insider trading, fraud, and market manipulation.

They also have the power to bring enforcement actions against violators, which may result in fines, penalties, and other sanctions.

Similarly, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) investigate and bring enforcement actions related to antitrust violations, such as price-fixing and monopolistic behaviour.

These agencies have the power to sue companies and individuals for damages and to seek injunctive relief to prevent further anticompetitive behaviour.

In environmental law, agencies like the Environmental Protection Agency (EPA) investigate and bring enforcement actions against companies and individuals who violate environmental regulations, such as pollution control and waste management requirements. These actions may result in fines, penalties, and orders to remediate any harm caused to the environment.

Banking Law in the United States

Banking law in the United States is a complex system of federal and state regulations governing financial institutions such as banks, credit unions, and other lenders.

The primary federal regulator of banks is the Office of the Comptroller of the Currency (OCC), which oversees national banks, while the Federal Reserve regulates state-chartered banks that have chosen to become members of the Federal Reserve System.

The main goal of banking law is to ensure the safety and soundness of the banking system, as well as to protect consumers and investors. The law covers a wide range of issues, including the operation of banks, the licensing and regulation of financial institutions, the provision of financial services, and the protection of customer deposits.

Some of the key laws and regulations that govern banking in the US include the Bank Holding Company Act, the Federal Deposit Insurance Act, the Financial Institutions Reform, Recovery, and Enforcement Act, the Gramm-Leach-Bliley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the USA PATRIOT Act.

In addition to federal laws, each state has its own banking laws and regulations, and banks are subject to oversight by state regulators as well as federal regulators.

This can create a complex regulatory environment for banks and financial institutions to navigate, as they must comply with both federal and state laws and regulations.

Keep Reading

• These 10 Indians are major client of Silicon valley bank
• List of major clients of Silicon valley bank
• Silicon Valley bank closed, here is how investors can get their money back
• List of major clients of Signature Bank

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