The Federal Reserve issued a joint pair of statements on Sunday with one clear message: Silicon Valley Bank’s depositors, both insured and uninsured, will receive help in a manner that will “fully protect” all. Depositors, the statement reads, “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.”
After consulting with the boards of the Federal Reserve and the Federal Deposit Insurance, as well as a consultation with President Biden, Treasury Secretary Janet Yellen “approved actions to enable the FDIC to complete its resolution of Silicon Valley Bank in a manner that fully protects all depositors, both insured and uninsured.”
The statement, released by Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg, also says that the Federal Reserve is prepared to address any liquidity pressures that may arise.
The financing will only be made available through the creation of a new Bank Term Funding Program, which will offer one-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 its statement that it does not anticipate that accessing that backstop “will be necessary.”
“The Board is closely monitoring conditions across the financial system and is prepared to use its full range of tools to support households and businesses, and will take additional steps as appropriate,” the statement reads.