U.S. Scrambles to Prepare Financial Backstop to Stave Off Banking Panic

President Joe Biden speaks during a cabinet meeting in the Cabinet Room of the White House
AP Photo/Patrick Semansky

The U.S. government is scrambling on Sunday night to prepare emergency measures to shore up banks and the U.S. economy as the nation braces for a potential bank run on Monday.

The U.S. Treasury and the Federal Reserve are jointly preparing to launch a program to backstop deposits in excess of the Federal Deposit Insurance Corp. $250,000, according to people familiar with the matter.

The Federal Reserve is also preparing to ease the terms of banks’ access to its discount window, an emergency lending facility for banks to raise cash.

The emergency preparations are not yet official. The Fed and the U.S. Treasury have not publicly commented on measures they are considering to stave off a rush of demand for bank account deposits to be withdrawn.

Silicon Valley Bank, the 16the largest bank by assets in the U.S., failed on Friday after depositors rushed to withdraw deposits last week. This was the largest bank failure since the financial crisis and the second largest in U.S. history. Now the government is worried that customers may try to withdraw funds from other banks.


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