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US Treasury official says banks not being bailed out, depositors are being protected

Started by forex4you, Mar 13, 2023, 08:29 am

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US Treasury official says banks not being bailed out, depositors are being protected

<p>A senior US Treasury official:</p><ul><li>
The firms are not being bailed out, the depositors are being
protected</li><li>SVB equity and
bondholders will be wiped out</li></ul><p>More:</p><ul><li>
Steps on SVB were taken to stablilize the financial system and
protect depositors</li><li>Yellen made decision
on SVB  after receiving recommendation from Fed, FDIC, and after
consulting Biden</li><li>Yellen, other
officials continuing to monitor situation closely, as well as health
of broader banking system</li><li>Continue to see
considerable strength in our economy, and economy remains in good
shape</li><li>We will continue to
take steps to ensure financial system remains strong</li><li>Will work with
congress and financial regulators to consider additional actions to
further strengthen financial system</li><li>Things have moved
very quickly over the weekend, we recognized the urgency of getting
information out</li><li>Systemic risk
exception used for SVB, similar one used for signature</li><li>Signature resolution
will not require costs to be borne by taxpayer</li><li>Determined it was
better to use systemic risk exception, rely on deposit insurance fund
and get information out to depositors before Monday</li><li>Funds in the deposit
insurance fund are 'fully sufficient'</li><li>In time, may look
back and assess whether changes needed to deposit insurance fund</li><li>US actions were for
silicon valley bank not entire holding company</li><li>Keeping payrolls
working could have large implications for the economy and access to
credit for small businesses</li><li>Actions taken were
aimed at limiting consequences of deposit outflows from silicon
valley and signature, reduce spillover effects</li></ul><p>Of note on the new Bank Term Funding Program (BTFP),</p><ul><li>
allows banks to pledge collateral at par</li><li>this means holdings of
long-dated Treasuries or MBS with mark-to-market losses can unlock
liquidity based on original value</li></ul><p>bailout</p>

                This article was written by Eamonn Sheridan at www.forexlive.com.

Source: US Treasury official says banks not being bailed out, depositors are being protected

forexlive.com
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