Fed announces new emergency loan program for banks to ease SVB contagion risk
The Federal Reserve on Sunday announced a new emergency loan program to bolster the capacity of the banking system in the wake of the collapse of Silicon Valley Bank.Under the new program, banks and other lenders will be able to pledge Treasurys and mortgage-backed securities for cash.The central bank said “it is prepared to address any liquidity pressures that may arise.”
The program is called the Bank Term Funding Program. Treasury Secretary Janet Yellen approved a plan to provide up to $25 billion as a backstop for the new program.The central bank said that the capital and liquidity positions of the U.S. banking system “are strong” and the U.S. financial system is “resilient.”
The Fed said its board of governors “is closely monitoring conditions across the financial system and is prepared to use its full range of tools to support households and businesses, and will take additional steps as appropriate.”
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