The Fed, Treasury and FDIC announced measures to help ensure that banks have ample liquidity to meet any deposit withdrawals without taking losses, and to reduce the risk of uninsured depositor flight. The plan consists of (1) a new Fed facility (the Bank Term Funding Program, or BTFP) and (2) the FDIC’s guarantee of all deposits, insured and uninsured, at Silicon Valley Bank (SVB) and Signature Bank. The Fed also eased margins terms on discount window lending, in line with the terms of the new BTFP. What follows are a few thoughts on these developments.
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