A man walks past the headquarters of Silicon Valley Bank on March 10, 2023 in Santa Clara, California.

Liu Guangguan | Getty Images

Banking regulators laid out a plan on Sunday to shore up deposits at a Silicon Valley bank, a critical step in stemming panic over the tech-focused institution’s collapse.

In a long-awaited announcement by the Federal Reserve, the central bank said it is creating a new emergency bank financing program aimed at protecting deposits at failing institutions.

The facility will offer loans for up to one year to banks, savings associations, credit unions and other institutions. Those who take advantage of the opportunity will be asked to pledge high-quality collateral such as Treasuries, agency debt and mortgage-backed securities.

“This measure will increase the ability of the banking system to protect deposits and ensure the continuous supply of money and credit to the economy,” the Fed said in a statement. “The Federal Reserve is prepared to address any liquidity pressures that may arise.”

The Treasury Department is providing up to $25 billion from its Currency Stabilization Fund as support for the financing program.

Along with the facility, the Fed said it will ease conditions in its discount window, which will use the same terms as the BTFP.

The news comes after Treasury Secretary Janet Yellen said Sunday morning that there would be no bailout for SVB.

“We’re not going to do that anymore. But we’re concerned about depositors and focused on meeting their needs,” Yellen said on CBS’ “Face the Nation.”

The failure of SVB was the nation’s largest failure of a financial institution since the collapse of Washington Mutual in 2008.

There has also been talk of the Fed stepping in to ease the terms of its discount window so that affected institutions have easy access to liquidity. In concept, banks could mortgage the bonds to get cash to pay nervous depositors.

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