On Friday, March 10, 2023, Federal Regulators shut down Silicon Valley Bank (SVB) due to its lack of liquidity. SVB had a structure very different than traditional financial institutions, as it was a key player in the tech and venture capital community. Closely connected with SVB, regulators also closed Signature Bank, on Sunday, March 12, 2023. Signature Bank provided banking services to real estate companies, law firms, and cryptocurrency companies. All depositors of both institutions will have access to and receive their full deposits and losses will not be borne by taxpayers, according to regulators.
Independent Federal Credit Union members should know that Independent is a safe place to save money. Independent Federal Credit Union has sound financial policies and receives high rankings annually from regulators for safety and soundness practices and management of risk. Deposits at Independent are protected by the National Credit Union Share Insurance Fund and insured up to at least $250,000 per individual depositor – the same as any other federally insured financial institution. That means backing by the full faith and credit of the U.S. government. Independent Federal Credit Union is well-capitalized and in a solid financial position to meet the saving and borrowing needs of its members.
Members should also be aware that SCAMS have already been reported, trying to alarm consumers. In this sophisticated scam, the scammers are communicating that a bank or credit union is under Federal Bureau of Investigation (FBI) review and the person needs to take out their cash from their bank/credit union or risk losing it. Please be aware of suspicious calls or emails at all times.
The federal government takeover of California-based Silicon Valley Bank ($205 billion assets) was the second largest U.S. bank failure, and the failure of New York-based Signature Bank ($110 billion assets) was the third largest. These banks focused a lot on technology start-ups and cryptocurrency respectively. SVB had a very high percentage of its deposits uninsured. The average in the Credit Union system is 8%. So, these two banks were different from Credit Unions and many other banks given the focus of their activities and the structure of their balance sheets. Here is the just-released NCUA statement (from Chairman Todd Harper) associated with the fallout from these bank failures:
“The credit union system remains well-capitalized and on a solid footing. The agency continues to monitor credit union performance through both the examination process and offsite monitoring, and it will continue to do so into the future. Credit unions have access to a wide range of liquidity sources. The NCUA, along with its Central Liquidity Facility is able to provide a backup source of liquidity to member credit unions as needed. The agency continues to coordinate with other federal financial institution regulators to ensure the continued resiliency of the American financial services system. As always, the NCUA is committed to the protection of credit union members and the safety and soundness of the credit union system overall.”
Members should also be aware and on the lookout as scams have already been reported trying to alarm consumers. Please be aware of suspicious calls or emails at all times. If you have questions concerning the security of your deposits or concerning scams or suspicious phone calls, please reach out to the dedicated staff at Independent Federal Credit Union.