U.S. weighs new fund as backup if more banks fail

The U.S. Federal Reserve and the Federal Deposit Insurance Corp are considering creating a fund to allow regulators to backstop deposits at banks if they fail. According to a Bloomberg News report on Saturday, this came as a result of the Silicon Valley Bank’s collapse.

The report also said that regulators have discussed the new fund with banking executives and are hoping that the new measure will help control panic and reassure depositors.

Bloomberg’s report also added that the new fund is part of the agency’s contingency planning due to the ongoing panic about the health of banks.

According to Reuters, both the U.S. Federal Reserve and the Federal Deposit Insurance Corp did not comment on the report.

U.S. president, Joe Biden, spoke on Saturday with California Governor, Gavin Newsom, about the SVB collapse and the efforts that will be taken to address the current situation.

According to Reuters, SVB imploded after depositors rushed to withdraw their deposits due to concerns about the lender’s financial health. The two-day run on the bank stunned markets and wiped out more than 100 billion dollars in market value for U.S. banks.

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