The U.S. Federal Reserve and the Federal Deposit Insurance Corp are weighing the creation of a fund that would allow regulators to backstop more deposits at banks that run into trouble in the wake of Silicon Valley Bank’s collapse, Bloomberg News reported on Saturday.
Regulators discussed the new special vehicle in conversations with banking executives and hope such a measure would reassure depositors and help contain any panic, the report said, citing people familiar with the matter.
The new vehicle is part of the agency’s contingency planning as panic spreads about the health of banks focused on the venture capital and startup communities, the report added.
The U.S. Federal Reserve declined to comment on the report, while FDIC did not immediately respond to a Reuters request for comment.
Earlier on Saturday, U.S. President Joe Biden spoke with California Governor Gavin Newsom about the SVB failure and the efforts to address the situation.
Silicon Valley Bank imploded after depositors, concerned about the lender’s financial health, rushed to withdraw their deposits. The frenetic two-day run on the bank blindsided observers and stunned markets, wiping out more than $100-billion in market value for U.S. banks.
Bank employees were offered 45 days of employment at one and a half times their salary by the FDIC, the U.S. regulator that took control of the collapsed lender on Friday, according to an email to staff seen by Reuters.
Workers will be enrolled and given information about benefits over the weekend by the FDIC, and healthcare details will be provided by the former parent company SVB Financial Group, the FDIC wrote in an email entitled “Employee Retention” late on Friday. SVB had a workforce of 8,528 at the end of last year.
Staff were told to continue working remotely, except for essential workers and branch employees.
Members of California’s congressional delegation are set to be briefed by FDIC officials on Saturday, according to a report by Politico, which cited two people familiar with the situation.
The lender’s main office in Santa Clara, California, and all of its 17 branches in California and Massachusetts will reopen on Monday, the FDIC said in a statement on Friday.