Fed vows funds to steady banks facing failure threat
Administration intervenes to allay fears over the market meltdown after SVB, Signature Bank collapse
US Federal Reserve has stepped in to assure depositors of banks' ability to meet the needs of depositors hit by failing banks as the collapse of two banks hit investor confidence.
The action will "bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy," the Fed said in a press release. "The Federal Reserve is prepared to address any liquidity pressures that may arise."
The additional funding will be made available through two new Bank Term Funding Programs (BTFP), to be valued at par, offering loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other collateral, the statement said.
"The BTFP will be an additional source of liquidity against high-quality securities, eliminating an institution's need to quickly sell those securities in times of stress.
