Senate rescue plan aims to calm depositors, debt holders
By Brendan Pedersen, Hannah Lang
Senators have dusted off a financial crisis-era backstop for banks’ transaction deposits and senior unsecured debt in their coronavirus stimulus bill to try to calm potential fears about the pandemic’s effects on the financial sector. The massive aid package passed by the Senate late Wednesday would authorize the Federal Deposit Insurance Corp. to resurrect its 2008 Temporary Liquidity Guarantee Program. …“The real value of the guarantee program will be to create a safe haven for funds and ensure some of the people who have been panicking and pulling cash out of the bank that they don’t have to,” said Karen Petrou, managing partner of Federal Financial Analytics. “The bulk of the people running to banks and pulling out cash have accounts well below $250,000 anyway. This is not a real problem. It’s just a reassurance.”