The Washington Post has reported that US officials are considering bailing out all Silicon Valley Bank deposits. Specifically, the report stated federal officials considering “safeguarding all uninsured deposits,” at the now-closed financial institution.
Moreover, the government is considering “extraordinary intervention,” to limit any potential fear derived from the country’s financial system. Sources have told the publication of the potential bailout that is currently being discussed by officials at the Treasury Department, Federal Reserve, and the Federal Deposit Insurance Corp (FDIC).
US Considers “Safeguarding” SVB Deposits
The collapse of SVB Financial was a development in the banking sector that no one saw coming. Subsequently, as unrealized losses forced the bank to seek capital, its closure marked the largest bank failure since the financial collapse of 2008.
Conversely, government officials are seeking ways to keep the development from inciting panic in the sector. Specifically, the Washington Post has reported that US officials are considering bailing out all Silicon Valley Bank deposits.
The report states that authorities are weighing a potential safeguard of the now-closed bank’s uninsured deposits. Moreover, they are potentially set to organize “extraordinary intervention to prevent what they fear would be a panic in the US financial system,” according to sources.
“Officials at the Treasury Department, Federal Reserve, and Federal Deposit Insurance Corporation discussed the idea this weekend,” the report stated. Additionally noting that White House officials have “studied the idea,” in subsequent meetings.
Conclusively, it was noted that “the plan would be among the potential policy response if the government is unable to find a buyer for the failed bank.” Moreover, an auction by the FDIC was organized today, with bids being accepted until late Sunday.