FDIC returned $40 billion in U.S. Treasury funds, reversing withdrawal after SVB takeover
Reuters
Published Mar 15, 2023 04:34PM ET
Updated Mar 15, 2023 05:51PM ET
By David Lawder
WASHINGTON (Reuters) -The Federal Deposit Insurance Corp deposited $40 billion back into the U.S. Treasury General Account on Tuesday, reversing a $40 billion withdrawal on Friday as the regulator took control of the failed Silicon Valley Bank, Treasury financial data released on Wednesday showed.
A Treasury spokesperson referred questions about the fund transfers to the FDIC, which declined comment.
On Tuesday, before the restoration of the funds was disclosed in the latest Daily Treasury Statement, the Treasury said that the $40 billion withdrawal would not affect estimates for when it would no longer be able to pay all U.S. government bills without a debt ceiling increase.
After the initial $40 billion withdrawal on Friday as SVB Financial was closed and put under FDIC receivership, the Treasury, FDIC and Federal Reserve on Sunday announced guarantees for both insured and uninsured deposits at the institution to shore up confidence in the banking system.
The same protections were offered to New York's Signature Bank (NASDAQ:SBNY), which failed on Sunday, and the Federal Reserve opened a new facility to give the banks access to emergency funds.
The restoration of the funds to Treasury's cash balance held at the Fed came a day after SVB and Signature reopened on Monday with access to the Fed facilities, which allow them to borrow from the Fed's discount window by pledge bonds at par value as collateral, rather than at their diminished market value.
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Written By: Reuters
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