Government Steps In With Plan to Protect All Deposits at Silicon Valley Bank

Bank regulators announced a Sunday emergency measure to fully protect Silicon Valley Bank’s deposits. This is a vital step in preventing panic from erupting due to the bank’s collapse.

U.S. Treasury Department, the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC) have revealed the plan in a joint statement.

“Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system,” This is the statement.

After consulting with the president as well as regulators, Janet Yellen (Treasury Secretary) has approved the plan. “fully protects all depositors.”

The FDIC currently provides $250,000. This is the maximum amount of protection that can be provided to a depositor. The new plan will protect all deposits, insured or not.

“Depositors will have access to all of their money starting Monday, March 13.  No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer,” According to the statement.

“Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.”

New York’s Signature Bank was also closed by the state charting authority on Sunday after regulators announced a similar initiative.

“All depositors of this institution will be made whole,” The joint statement was.

The Fed also provides this service. Announcement Sunday, the government will increase funding for eligible depository institutions in order to meet all depositors’ requirements.

“The Federal Reserve is prepared to address any liquidity pressures that may arise,” According to the Fed, this statement was made.

In an effort to prevent a banking crises, the central bank established a Bank Term Funding Program. This program is intended to protect depositors at institutions that have failed.

The Treasury Department will “make available up to $25 billion from the Exchange Stabilization Fund as a backstop for the BTFP,” The central bank made the announcement.