US, 117 billion requested by the banks from the Fed
A good 117 billion dollars a day is the “monster” figure that American banks have asked the Federal Reserve to deal with the panic of current account holders that arose after the failures of Silicon Valley Bank and Signature Bank. The figure is three times higher than that of the pandemic and breaks down the record of 112 billion from the 2008 crisis.
However, the maximum figure is on Wednesday 15 of last week, almost 153 billion dollars with an average of 85 billion per day. The exceptional credit line put in place by the Fed with the approval of Joe Biden’s government has eased the flexibility criteria to give the green light to the requests of the institutions. The new mechanism called Term Bank Financing Program (BTFP) allows loans up to a maximum of 12 months guaranteed by government bonds.
Securities which, however, are valued as collateral at their full nominal value and not at market value, which is lower after the upward trend in interest rates. The loss in the portfolio was one of the most obvious aspects that caused the start-up bank to crash. This government lifesaver appears to have served. It was used for a total of 35 billion daily requests and, above all, it calmed the financial markets.
Usa, the domino effect also in the Old Continent
But the domino effect was also felt in the old continent with the collapse of Credit Suisse and the very rapid rescue of Ubs and above all with yesterday’s stock market crash of the super-solid Deutsche Bank. The storm does not seem to have passed yet and for this reason the US Treasury Secretary, Janet Yellen, quickly brought together the “crisis team” of the Financial Stability Oversight Council (FSOC).
The team includes Jerome Powell chairman of the Fed, the Securities and Exchange Commission (SEC); that of the Deposit Guarantee Fund, the FDIC and other authorities. And above all, both Joe Biden and Yellen herself reiterated that the US financial system is solid, the banks are well capitalized and healthy and the government is ready to support them as long as there is a need. A similar statement was made by Christine Lagarde number one of the ECB. And the eyes are so focused on next Monday
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