In an extraordinary joint statement, the Treasury, Federal Reserve, and the FDIC announced measures today to strengthen confidence in the U.S. banking system following the closure of Silicon Valley Bank (SVB).
These measures include:
- Enabling the FDIC to complete its resolution of SVB in a manner that, per the statement, "fully protects all depositors [such that] depositors will have access to all of their money starting Monday, March 13."
- Announcing measures for Signature Bank, which was closed today by its state chartering authority, such that all depositors of that bank will also "be made whole."
The Federal Reserve Board further stated that these actions will "fully protect[] all depositors, both insured and uninsured" and "will reduce stress across the financial system, support financial stability, and minimize any impact on businesses, households, taxpayers, and the broader economy."
As a further measure, the Federal Reserve Board also announced that it will make available additional funding to eligible banks to help ensure banks have the ability to meet the needs of all their depositors, through the creation of a new Bank Term Funding Program (BTFP).
These developments are welcome reassurance of the U.S. government's commitment to taking the necessary steps to ensure that depositors' savings remain safe. Nevertheless, navigating the practical ramifications of SVB's closure and these developments will be challenging.
