NEW: Federal banking regulators took aggressive new actions aimed at preventing depositors' funds in failed Silicon Valley Bank from losing money and trying to prevent its downfall from unleashing a nationwide run across the banking system.
Why it matters:
If unchecked, that would lead to more bank failures and potentially a broad contraction in credit in the economy.The Treasury Department, Federal Deposit Insurance Corp. and the Federal Reserve, citing "systemic risk" under which the agencies can take extraordinary actions, said that the FDIC's insurance funds will be used to prevent depositors from losing money.
The Fed also announced a new "Bank Term Funding Program," invoking emergency authority, that enables other banks to obtain quick cash in exchange for collateral.approved actions to enable the FDIC to complete its resolution of Silicon Valley Bank in a manner that fully protects all depositors, both insured and uninsured," the Treasury, the Federal Reserve and the FDIC said in a joint statement.
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