Friday night, a closed bank
Stakes · Whether the Federal Reserve treats Silicon Valley Bank’s failure as a liquidity event that a par-value facility can contain, or as a problem for the discount window alone.
It is the evening of 10 March 2023. California regulators have closed Silicon Valley Bank (SVB). The is receiver.
Most SVB deposits sat above the $250,000 insurance cap — operating companies and venture funds. They will move cash before Monday.
SVB held Treasuries and agency mortgage-backed securities in hold-to-maturity accounts. Mark-to-market losses grew as the Federal Open Market Committee () hiked in 2022–23. Selling those bonds locks in losses.
The ordinary haircuts collateral to market value. Banks treat it as stigmatised.
Staff can draft a program: one-year advances against high-quality securities valued at par — later named the Bank Term Funding Program (). You can rely on the window alone. You can wait for Monday’s open.
Constraints of the office here
- — You chair the Board and the FOMC. You do not appropriate fiscal money.
- — Section 13(3) facilities need the Treasury Secretary’s approval.
- — Uninsured-deposit protection is a systemic-risk exception. The Fed Board recommends; Treasury determines.
Options · keys 1–3