The US is pulling out all the stops to try to contain the fallout from the Silicon Valley bank failure and avert a banking crisis.
US President Biden today appealed for confidence by promising that all deposits of US bank customers would be protected.
Customers need not fear losing their money. That does not apply to investors, Biden said.
Unlike the financial crisis, this time no bank would be bailed out with taxpayers' money.
Currently, the deposits of all US Americans in banks are protected by the US Deposit Insurance Fund, which holds 89 billion dollars, up to 250 thousand dollars per customer.
To be on the safe side, this fund will be increased.
With a new funding pot called "Bank Term Funding Programme", into which up to 25 billion dollars will flow.
Banks can, if customers withdraw massive amounts of money, quickly get money from the pot to close the gaps.
These are bridging loans that the banks have to pay back after one year.
As collateral, they have to deposit bonds that are valued as if the current interest rate turbulence did not exist.
Ultimately, the aim is to keep the banks liquid and thus prevent bankruptcies from the outset.
As in the financial crisis, some banks are again lacking liquidity.
Unlike back then, when the international networking of institutions plunged the global financial system into crisis, this time it is only about a manageable number of US banks that have granted loans to companies regionally, mostly in Silicon Valley.
They got into trouble because of their high cluster risk and in the course of the interest rate turnaround that led to the revaluation of their securities portfolios.
After Silicon Valley Bank and Silvergate Bank, First Republic Bank is now also reeling, even though it still has over 70 billion dollars in insured liquidity, its share price plummeted by more than 70% today.
US President Biden now wants to regulate banks more strongly under Trump, banking regulation, which was tightened after the financial crisis, was softened again - this is now taking revenge US supervisors were blind again US regulation has failed again.
In 2018, Trump passed a law that raised the threshold for US banks to be considered systemically important from $50 billion to $250 billion.
Since then, all banks with less than $250 billion do not have to report their liquidity position to regulators - a black box.
The crisis case was only simulated in light stress tests. Transparency at these banks - non-existent!
Draw your own conclusions and above all .. Stay safe !
US President Biden today appealed for confidence by promising that all deposits of US bank customers would be protected.
Customers need not fear losing their money. That does not apply to investors, Biden said.
Unlike the financial crisis, this time no bank would be bailed out with taxpayers' money.
Currently, the deposits of all US Americans in banks are protected by the US Deposit Insurance Fund, which holds 89 billion dollars, up to 250 thousand dollars per customer.
To be on the safe side, this fund will be increased.
With a new funding pot called "Bank Term Funding Programme", into which up to 25 billion dollars will flow.
Banks can, if customers withdraw massive amounts of money, quickly get money from the pot to close the gaps.
These are bridging loans that the banks have to pay back after one year.
As collateral, they have to deposit bonds that are valued as if the current interest rate turbulence did not exist.
Ultimately, the aim is to keep the banks liquid and thus prevent bankruptcies from the outset.
As in the financial crisis, some banks are again lacking liquidity.
Unlike back then, when the international networking of institutions plunged the global financial system into crisis, this time it is only about a manageable number of US banks that have granted loans to companies regionally, mostly in Silicon Valley.
They got into trouble because of their high cluster risk and in the course of the interest rate turnaround that led to the revaluation of their securities portfolios.
After Silicon Valley Bank and Silvergate Bank, First Republic Bank is now also reeling, even though it still has over 70 billion dollars in insured liquidity, its share price plummeted by more than 70% today.
US President Biden now wants to regulate banks more strongly under Trump, banking regulation, which was tightened after the financial crisis, was softened again - this is now taking revenge US supervisors were blind again US regulation has failed again.
In 2018, Trump passed a law that raised the threshold for US banks to be considered systemically important from $50 billion to $250 billion.
Since then, all banks with less than $250 billion do not have to report their liquidity position to regulators - a black box.
The crisis case was only simulated in light stress tests. Transparency at these banks - non-existent!
Draw your own conclusions and above all .. Stay safe !