Treasury, regulators unveil bank rescue plan to stem crisis
By Zachary Warmbrodt, Victoria Guida and Sam Sutton
Federal authorities took aggressive action Sunday to end days of global uncertainty and panic, agreeing to backstop all depositors for two failed lenders — and to prevent runs on any other financial institutions. The Treasury Department, Federal Reserve and FDIC vowed that taxpayers would not bear losses from the moves to bolster the depositors at the two shuttered lenders, Silicon Valley Bank and Signature Bank. The agencies said Silicon Valley Bank’s depositors would have access to all their money on Monday…The agencies were praised by lawmakers from both parties for taking swift action to stem a financial panic. But Federal Financial Analytics managing partner Karen Petrou said the situation was one of their own making, criticizing regulators for not acting on problems at both banks before they failed. The massive intervention was required because the Fed and FDIC “were caught flat-footed at SVB, failing not only to anticipate its structural weakness due to concentrated deposits and illiquid assets, but also the broader shock [that] closing a big bank would do after decades of depositor bailouts,” said Petrou, who advises bankers on policy.