The Federal Reserve’s collaboration with state regulators resulted in the immediate protection of depositors at Silicon Valley Bank. The banking system shutdown caused widespread panic and chaos among the public, with many uninsured individuals now left without access to their money. State agencies worked quickly to come up with a plan that would protect all depositors, and on Monday, March 13th all deposits will be available for withdrawal.
The FDIC has completed the resolution of Silicon Valley Bank and fully protected all depositors. The final result is a much smaller bank with deposit insurance coverage that is similar to other large banks. All depositors will have experienced minimal disruptions during this process.
Recent events suggest that banks may face liquidity pressures in the near term. The Federal Reserve is prepared to address any such pressures, should they arise.
The move is likely to reassure nervous deposit holders, who have fretted in recent weeks about the future of a program that was initially intended to provide emergency financing for lenders during the recession.
The Board of Governors of the Federal Reserve System has warned that conditions in the financial system are still unstable and could worsen. In a recent statement, they said that they are prepared to use their full range of tools to support households and businesses should needed be. This is a sign that the Fed is not completely confident in the state of the economy and could take additional steps to help stabilize it.