receives from winding down the two banks - either by selling them to other financial institutions or by auctioning off their assets. Most of the cost of guaranteeing all deposits at both banks will likely be covered by the proceeds the Federal Deposit Insurance Corp. Here are some questions and answers about the cost of the bank collapses: HOW IS THE RESPONSE BEING PAID FOR? ![]() Over time, those banks could pass higher costs on to customers, forcing everyone to pay more for services. But other banks may have to help defray the cost of covering uninsured deposits. Taxpayers will probably bear no direct cost for the failure of Silicon Valley Bank and Signature Bank. That scenario would unsettle the entire financial system and risk derailing the economy. The goal is to prevent a broadening panic in which customers rush to pull out so much money that even healthy banks buckle. The Fed did not say how many other banks borrowed money and added that it expects the loans to be repaid. On Thursday, the Fed provided the first glimpse of the scale of the response: It said banks had borrowed about $300 billion in emergency funding in the past week, with nearly half that amount going to holding companies for the two failed banks to pay depositors. The Federal Reserve announced a new lending program for all banks that need to borrow money to pay for withdrawals. ![]() The Biden administration said it will guarantee uninsured deposits at both banks. It could be months before the answers are fully known.
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