The Federal Deposit Insurance Corp. and the Federal Reserve are weighing creating a fund that would allow the regulators to backstop more deposits at banks that run into trouble following Silicon Valley Bank’s collapse.

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Regulators discussed the new special vehicle in conversations with banking executives, according to people familiar with the matter. The hope is that setting up such a vehicle would reassure depositors and help contain any panic, said the people. They asked not to be identified because the talks weren’t public.

A representative for the Federal Reserve declined to comment. Representatives at the FDIC didn’t immediately respond to a request for comment.

The 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.

SVB became the biggest US lender to fail in more than a decade on Friday, after a tumultuous week that saw an unsuccessful attempt to raise capital and a cash exodus from the startups that fueled its rise. California state watchdogs took possession of the bank, which was valued at more than $40 billion as recently as last year.

First Published:Mar 12, 2023 8:25 AM IST