US regulators protect Silicon Valley Bank deposits and shore up financial system13 Mar 2023 05:47
From the FT:
"US regulators said Silicon Valley Bank depositors would be fully repaid as they acted to shore up the banking system after the lender’s implosion, unveiling emergency funding measures and closing down a second financial institution.
The Federal Reserve announced a new lending facility on Sunday aimed at providing extra funding to eligible institutions to ensure that “banks have the ability to meet the needs of all their depositors”. The US central bank said it was “prepared to address any liquidity pressures that may arise”.
The so-called Bank Term Funding Program will offer loans of up to one year to lenders that pledge collateral including US Treasuries and other “qualifying assets”, which will be valued at par.
The programme will eliminate an institution’s “need to quickly sell those securities in times of stress” and would be enough to cover all uninsured US deposits, the Fed said. The facility is backstopped by the Treasury, which put up $25bn. The discount window, where banks can access funding at a slight penalty, remained “open and available”, the central bank added.
The regulators said all depositors of SVB would have access to their money on Monday, as would those of Signature, which was closed by the New York Department of Financial Services before being placed under FDIC control and marketed for sale.
Officials on Sunday said no losses stemming from the resolution of either SVB or Signature’s deposits would be borne by the taxpayer. Any shortfall would be funded by a levy on the rest of the banking system. They added that shareholders and certain unsecured debtholders would not be protected."
https://www.ft.com/content/8e0be2f4-0b41-4768-b586-49180980ba90
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