The United States government has declared that it will guarantee deposits at the now-defunct Silicon Valley Bank (SVB) as financial regulators scramble to allay fears that the failure of the tech-focused lender could spark a broader economic catastrophe.

Following the bank's failure, the U.S. Treasury Department, Federal Reserve, and Federal Deposit Insurance Corporation (FDIC) stated on Sunday that all clients would be safeguarded and have full access to their funds.

The agencies stated in a joint statement, "Today, we are taking bold steps to defend the U.S. economy by bolstering public confidence in our financial system."

This action will guarantee that the U.S. banking system continues to execute its essential functions of preserving deposits and providing access to credit to individuals and companies in a way that fosters robust and sustained economic growth.

However, regulators refrained from announcing a bailout similar to those offered to banks during the 2007–2008 financial crisis, stating that investors and senior management would bear losses and taxpayers would not be required to prop up the business.

During an interview with CBS before the announcement of the measures, U.S. Treasury Secretary Janet Yellen stated, "Let me be clear that during the financial crisis, investors and owners of systemically large banks were bailed out, and the reforms that have been put in place mean that we will not be doing that again." Yet, we are concerned about depositors and endeavour to suit their demands.

On Sunday, U.S. Vice President Joseph Biden stated that he is determined to hold accountable those responsible for "this catastrophe" and would continue to enhance regulation of the nation's most prominent institutions.

Biden stated, "Tomorrow morning, I will discuss how we will preserve a strong banking system to safeguard our historic economic rebound."

After seizing the bank's assets on Friday following a mass withdrawal of funds by depositors, U.S. regulators have been trying to find a buyer for Santa Clara-based SVB, the country's sixteenth-largest bank.

Following its announcement of plans to raise $1.75bn in the capital following the loss-making issuance of bonds, the bank's financial condition was investigated.

SVB, whose business catered primarily to technology professionals and companies backed by venture capital, had around $200 billion in assets at its demise. The bank's failure is the second-largest in U.S. history, following the 2008 collapse of Washington Mutual.

Signature Bank of New York has also failed and is being seized, marking the third-largest bank failure in the history of the United States.

Authorities stated that a "similar systemic risk exception" would be provided to Signature Bank to cover all of its deposits.

In the early Asian trading session following the announcement, financial markets surged, but doubts regarding prospective purchasers for the banks remained unanswered.

Some observers had warned that bank customers could launch runs on other financial institutions and potentially trigger a broader financial crisis if the government did not intervene to protect depositors. However, economists have emphasized that SVB's failure is vastly different from the failure of Lehman Brothers, which triggered the 2007-2008 financial crisis.

Professor Campbell R. Harvey of the Fuqua School of Management at Duke University stated that SVB was not among the largest banks and had fallen for different reasons than institutions that failed in 2007-2008.

Harvey told Al Jazeera, "If you consider the global financial crisis, there were a lot of institutions at risk at the same time, and we began to hear about them. These were not tiny players — these were major players, and they were closely correlated."

"This bank is unique. That is not among the best. Most people have never heard of it, although it has been centred on tech investors in Silicon Valley... Hence, I see no similarities with 2007."

Harvey stated that while most banks were significantly overleveraged in the run-up to the 2007-2008 financial crisis, SVB fell owing to its excessive reliance on the technology industry, which has lost trillions of dollars in value over the past year.

He stated, "SVP is a story of an undiversified lending portfolio." That is distinct.