US considering new fund to cover deposits as more banks fail, Bloomberg News says

March 11 (Reuters) – The US Federal Reserve and the Federal Deposit Insurance Corp are considering the creation of a fund that would allow regulators to cover more deposits at banks troubled by the collapse of Silicon Valley Bank, Bloomberg News reported on Saturday.

Regulators discussed the new dedicated vehicle in talks with bank executives and hope such a measure will reassure depositors and help contain any panic, the report said, citing people familiar with the matter.

The new vehicle is part of the agency’s contingency planning as panic spreads over the health of banks targeting the venture capital and startup communities, the report said.

The US Federal Reserve building is pictured in Washington, March 18, 2008. REUTERS/Jason Reed

The US Federal Reserve declined to comment on the report, while the FDIC did not immediately respond to a Reuters request for comment.

Earlier on Saturday, US President Joe Biden spoke with California Governor Gavin Newsom about the failure of the SVB and efforts to address the situation.

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Silicon Valley Bank imploded after depositors, concerned about the lender’s financial health, rushed to withdraw their deposits. The bank’s frantic two-day run dazzled observers and stunned markets, wiping out more than $100 billion in market value for US banks.

Reporting by Jose Joseph in Bengaluru; Edited by Paul Simao

Our Standards: The Thomson Reuters Principles of Trust.


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