The Federal Reserve issued a combined pair of statements on Sunday with a clear message: Silicon Valley Bank depositors, both insured and uninsured, will receive help in a way that will “fully protect” everyone. Depositors, the statement read, “will have access to all of their money beginning Monday, March 13. Any losses associated with the resolution of Silicon Valley Bank will not be borne by the taxpayer.”
The move comes after a recommendation from the boards of the Federal Reserve and Federal Deposit Insurance and consultation with the President, Treasury Secretary Janet Yellen.
“Approved action to enable the FDIC to complete its resolution of Silicon Valley Bank in a manner that fully protects both insured and uninsured depositors.”
Yellen, Federal Reserve Board Chairman Jerome H. Powell and FDIC Chairman Martin J. The statement issued by Gruenberg also said that the Federal Reserve stands ready to relieve any liquidity pressures that may arise.
What to wait for: Financing will be made available only through the creation of a new bank term funding program, which will provide 1-year long loans to banks, savings associations and credit unions, as well as other depository institutions. There will also be a $25 billion backstop for the BTFP, although the Reserve wrote in the statement that it does not anticipate that reaching that backstop “will be necessary.”
“The Board is closely monitoring conditions across the financial system and will take additional steps as it stands ready to use its full range of tools to support households and businesses,” the statement said.