Photo: TAO-CHUAN YEH/AFP/Getty Images
After the Federal Reserve (Fed) granted multi-billion dollar loans to banks with the aim of propping up their finances so as not to face the same fate as Silicon Valley Bank (SVB), some institutions almost immediately accepted the support, situation that contradictorily exposes how vulnerable your financial health could be.
Data released by the Fed revealed that some banks received an injection of $11.9 billion dollars in loans granted through the emergency program known as the Bank Term Funding Program.
Said aid mechanism is quite favorable for the banks, credit unions and other financial institutions that accepted it because They are one-year loans in exchange for collateral such as Treasury bonds and other government-backed bonds.
Although they did not reveal which institutions it is, this to a large extent so as not to generate fear among their clients and investors, it was also learned that they received another $152.8 billion dollars through loans of up to only 90 days.
However, This amount of money sets a new record for loans granted by the Fed to credit institutions, since it already exceeds the $111 billion dollars granted during the 2008 financial crisis.
This way, those who resorted to the support of the Fed received $164.8 billion in financing that will allow them to have the necessary funds to calm their nerves around the possibility that some banks, especially regional ones, could experience a crisis similar to that of the SVB.
However, various analysts maintain that the next institution with the possibility of collapsing could be the First Republic, since its shares depreciated up to 35% by midweek and this also reduced its credit rating, something quite serious for the institution founded in 1985.
Under this approach, this week we will have to be aware of the impact that the Fed’s announcement will have when raising the interest rate again.
Another point to observe is the restructuring that will be given to the SVB after having acknowledged being bankrupt.
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