“For the banks that were put into receivership, the FDIC will use funds from the deposit insurance funds to ensure that all of its depositors are made whole,” a senior treasury department officer said.
“The deposit insurance fund is bearing the risk,” he emphasized.
“This is not funds from tax payers”
The fund is a part of the FDIC, the quarterly fees fund it and it is assessed on FDIC insured institutes and interest on funds invested in government bonds.
There is currently $100 billion present in the DIF..
While protecting these deposits, a new bank term funding program was announced by the federal reserve. The aim of this program is to safeguard the institutions that are vulnerable to market instability.
Loans up to 1 year will be offered to banks, saving associations, credit unions and other institutions by the new fed facility.
The ones taking the advantage of the facility will be asked to promise a good collateral like treasury’s, agency debt and mortgage backed securities.
The wall street journal’s editorial board said that the DIF deposit rescue plan and the BFTP as two separate “bailouts”
But Biden’s officials did not agree on the idea.
“The bank’s equity and band holders are being wiped out,” said the official.
“They took a risk as owners of securities, they will take the losses.”
“The firms are not being bailed out …depositors are being protected.”
There are signs that Biden’s plan of using DIF is being approved on Capitol Hill.
Sen bernie said that if there were to be a bailout of SVB the wall street and other large financial institutes must finance it 100%.
According to Sanders the successful republican efforts to relax banking regulations was because of SVB’s collapse.
Republicans have been coming in to express their support for the Fed action.
According to the South Carolina GOP it is important to bring the markets to a calm and orderly fashion.
The Failure of the SVB was the largest collapse of the nations’ financial institute since 2008.
- Published By Team Nation Press News