A man walks by the headquarters of Silicon Valley Bank on March 10, 2023 in Santa Clara, California.
Liu Guanguan | Getty Images
Banking regulators devised a plan Sunday to backstop depositors with money at Silicon Valley Bank, a critical step in stemming a feared panic over the collapsed tech-focused institution.
Regulators said depositors at both failed SVB and Signature Bank in New York, which also has been closed, will have full access to their deposits.
The Treasury Department said it approved of plans that would unwind both institutions “in a manner that fully protects all depositors.” Those with money at the bank will have full access starting Monday.
The Federal Reserve also said it is creating a new Bank Term Funding Program aimed at safeguarding institutions impacted by the market instability of the SVB failure.
A joint statement also said there would be no bailouts and no taxpayer costs associated with any of the new plans. Shareholders and some unsecured creditors won’t be protected.
“Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system,” said a joint statement from Fed Chair Jerome Powell, Treasury Secretary Janet Yellen and FDIC Chair Martin Gruenberg.
The Fed facility will offer loans of up to one year to banks, saving associations, credit unions and other institutions. Those taking advantage of the facility will be asked to pledge high-quality collateral such as Treasurys, agency debt and mortgage-backed securities.
“This action will bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy,” the Fed said in a statement. “The Federal Reserve is prepared to address any liquidity pressures that may arise.”
The Treasury Department is providing up to $25 billion from its Exchange Stabilization Fund as a backstop for the funding program.
Along with the facility, the Fed said it will ease conditions at its discount…
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