The Federal Reserve issued two joint statements on Sunday with one clear message. Silicon Valley Bank depositors, both insured and uninsured, are assisted in an all-inclusive “fully protected” manner. According to a statement, depositors “will have access to all funds beginning Monday, March 13. Losses related to the Silicon Valley Bank resolution will not be borne by taxpayers.”
After consulting with the Federal Reserve Board and the Board of Governors of the Federal Deposit Insurance, and after consulting with President Biden, Treasury Secretary Janet Yellen said, “How the FDIC will use the Silicon Valley Banks resolution to fully protect everyone. Approved the measures to allow it to be completed by both insured and uninsured depositors.”
Statements released by Yellen, Federal Reserve Chairman Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg also said the Federal Reserve is ready to address liquidity pressures.
Funding will only be available through the creation of a new Bank Term Funding Program that will provide one-year loans to banks, savings associations, credit unions, and other depository institutions. BTFP also has a $25 billion backstop, but the Reserve Bank said in a statement that it does not expect access to that backstop to be “necessary.”
“The Board is closely monitoring the situation across the financial system, stands ready to use all tools to support households and businesses, and will take additional steps if necessary,” the statement said. says.
