US Fed lends banks US$12 billion under one-year scheme unveiled on Sunday
THE Federal Reserve has lent US banks nearly US$12 billion under a new one-year lending programme unveiled on Sunday, as authorities moved to ease stress on the financial system after Silicon Valley Bank’s collapse.
The total outstanding amount of all advances under the Bank Term Funding Program reached US$11.9 billion by Wednesday, the US central bank announced in a statement on Thursday.
The Fed had unveiled the scheme alongside the Treasury and the Federal Deposit Insurance Corporation on Sunday night, as authorities looked to prevent other banks from running into the liquidity issues that ultimately doomed California’s SVB.
The scheme made additional funding available “to help assure banks have the ability to meet the needs of all their depositors,” the statement read.
US authorities moved swiftly to protect depositors at SVB and Signature Bank, which also collapsed, as they saw “serious risk of contagion” that could have triggered runs on many banks, Treasury Secretary Janet Yellen told Senators in Congress on Thursday.
In the days since SVB’s failure, a number of regional lenders led by First Republic Bank have seen their share prices plummet on concerns about their long-term financial health.
But markets responded positively after consortium of 11 of America’s biggest banks – including Bank of America, Goldman Sachs and JPMorgan Chase – announced on Thursday that they were depositing US$30 billion into First Republic.
The group said in a statement that their actions reflect “confidence in the country’s banking system.” AFP
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