The U.S. government has agreed to give a full guarantee to the closed Silicon Valley Bank (SVB) regardless of the amount of money entrusted to customers regardless of what is insured.
The Treasury Department, the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC) issued a joint statement on the 12th (local time) outlining these contents.
They said in a statement that Treasury Secretary Janet Yellen reported recommendations from the Fed and FDIC to President Joe Biden to approve a solution to the crisis that would fully protect all depositors.
As a result, all depositors will have access to their full deposits from the 13th and there will be no costs incurred by taxpayers in connection with the loss of SVB, the Treasury said.
However, the Treasury Department said some shareholders and unsecured creditors were not protected and that SVB's senior management took responsibility for the incident and stepped down.
The Treasury Department said the New York State Financial Services Authority has taken similar measures against Signature Bank, which closed that day.
In this regard, the Fed has said it is creating a new fund (BTFP) to provide liquidity support to banks.
Through this, it plans to lend money for one year to banks that provide collateral such as U.S. Treasuries and mortgage-backed securities (MBS).
The Treasury Department said it plans to make up to $1 billion available from the Exchange Rate Stability Fund (ESF) to support the BTFP, but does not anticipate the actual need to spend this money.
U.S. Government Guarantees Silicon Valley Bank Deposits in Full... Liquidity support
2023-03-12T23:35:25.597Z
The U.S. government has agreed to give a full guarantee to a closed Silicon Valley bank that the money deposited by customers is fully guaranteed, regardless of the limits covered by insurance. The Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation issued a joint statement outlining these issues.
Source: sbskr