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The Federal Reserve issued a joint statement on Sunday with a clear message: Silicon Valley bank depositors, insured and uninsured, will receive help to “fully protect” all. Depositors, the statement said, “will receive all their funds from Monday, March 13.” No losses related to the Silicon Valley Bank settlement will be borne by the taxpayer.
After consulting with the Federal Reserve and Federal Deposit Insurance Boards, as well as President Biden, Treasury Secretary Janet Yellen said: “The FDIC has approved steps to allow the Silicon Valley Bank to complete a resolution that preserves everything.” Depositors, both insured and uninsured.
In a statement released by Yellen, Federal Reserve Board Chairman Jerome H. Powell and FDIC Chairman Martin J. Grunberg said the Federal Reserve is prepared to address any liquidity pressures that may arise.
The financing will be provided by creating a new bank term financing program that provides one-year loans to banks, savings associations and credit unions, as well as other depository institutions. There will be a $25 billion backstop for the BTFP, although the Reserve wrote in a statement that it does not think it will be “necessary” to reach that backstop.
“The board will closely monitor conditions in the financial system and is ready to deploy its full range of tools to support households and businesses and take further steps,” the statement read.
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