Feds try to stop bank crisis of their own making

NEW YORK – US bank regulators on Sunday announced a massive response to last week’s run on Silicon Valley Bank (SVB) and the risk of copycat runs against other regional banks.

The Federal Reserve will provide one-year loans against banks’ security portfolios through a new Bank Term Funding Program, eliminating the risk that banks might be forced to sell their US$4.4 trillion in government securities at a loss.

The Federal Deposit Insurance Corporation (FDIC), meanwhile, will make whole all SVB depositors, as well as those of the Signature Bank of New York, closed by New York state authorities on “systemic risk” grounds.