Here’s a guide to all the key terms you’ve been hearing
But headlines this week, from the collapse of Silicon Valley Bank to Credit Suisse’s need for a lifeline to instability at First Republic, have made the business of finance a national concern. So when you hear the
is taking over, a Treasury portfolio is sinking or a bank was backstopped and bailed out, what exactly does that mean? . It’s an acronym for the Federal Deposit Insurance Corporation, an independent government agency that protects depositors in banks. It’s one of the main names as banking failures play out because it can step in and make sure the institutions are operating properly. When a bank fails, the standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. Bailout Providing financial support to an institution that would otherwise collapse.
that lets it take action on a bank crisis that could drag down the entire sector with it. Though it’s pretty rare to enact it, the used this exception to take over SVB and Signature Bank last week. Discount window This is the Fed’s main way to directly lend money to banks and provide them more liquidity and stability. The loans last up to 90 days. Many banks are utilizing this tool right now because the Fed made it easier to borrow from the discount window in the wake of SVB to avoid further bank runs.
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