US moves to protect depositors, backstop banks in wake of Silicon Valley Bank collapse
- US financial regulators on Sunday set up a new lending programme offered by the Federal Reserve with funds from the Treasury Department
- The Treasury will ‘make available up to US$25 billion from the Exchange Stabilisation Fund as a backstop’, the Federal Deposit Insurance Corp said
US financial regulators moved on Sunday to assure all depositors their money is safe following the collapse of Silicon Valley Bank and set up a new lending programme offered by the Federal Reserve with funds from the Treasury Department.
Treasury Secretary Janet Yellen approved the actions, which enable the Federal Deposit Insurance Corp to resolve SVB “in a manner that fully protects all depositors,” the Treasury said on Sunday in a joint statement with the Fed and FDIC.
SVB depositors “will have access to all of their money starting Monday, March 13,” the government said. The statement noted that taxpayers will not be responsible for any losses associated with SVB’s resolution.
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The Federal Deposit Insurance Corp said in a separate statement that it is “prepared to address any liquidity pressures that may arise” and is creating a new “Bank Term Funding Programme” that offers loans to depository institutions that pledge assets “valued at par.”
The Treasury will “make available up to US$25 billion from the Exchange Stabilisation Fund as a backstop” for the bank funding programme but the Federal Deposit Insurance Corp does not expect to draw on the funds, it said.
