Focus on Liquidity and Risk Management

Actions to promote public confidence

March 2023

In concert with swift receivership action from the Federal Deposit Insurance Corporation (FDIC) the Administration and the federal banking regulators have taken the following actions to “protect the U.S. economy by strengthening the public confidence in our banking system”.

Treasury. The Department of the Treasury, the Federal Reserve Board (FRB), and the FDIC issued a joint statement announcing “decisive action” to make a “systemic risk exception” for the two institutions, permitting the FDIC to guarantee all deposits of those institutions.

Federal Reserve Board. The FRB announced a new emergency liquidity program, the Bank Term Funding Program (BTFP). The BTFP will:

  • Offer loans of up to one year in length to banks, savings associations, credit unions and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-back securities, and other qualifying assets as collateral.
  • Value pledged assets at par.
  • Impose margin of 100 percent of par value.
  • Be backstopped by $25 billion from the Exchange Stabilization Fund as credit protection to the Federal Reserve Banks.
  • Accept requests for advances through at least March 11, 2024. 

The FRB further stated that the discount window will apply the same margins as applicable to the securities eligible for the BTFP for depository institutions seeking liquidity at the window.

Administration. The President made a public statement calling for accountability and indicating that he would ask Congress and the federal banking regulators to strengthen regulations.  

For more information, please contact:

Amy S. Matsuo

Amy S. Matsuo

Regulatory and ESG Insights Leader, KPMG US

+1 919-664-7100