Investing
Record FDIC cash draw for SVB may affect debt ceiling ‘X date’
![](https://personalfinancedefined.com/wp-content/uploads/2023/02/LYNXNPEC0E0NG_L.jpg)
© Reuters. FILE PHOTO: Signs explaining Federal Deposit Insurance Corporation (FDIC) and other banking policies are shown on the counter of a bank in Westminster, Colorado November 3, 2009. REUTERS/Rick Wilking/File Photo
(Reuters) – The Federal Deposit Insurance Corp made a record withdrawal of $40 billion on Friday as it scrambled for resources to take over failing Silicon Valley Bank that same day, government data shows, a development that could have implications for how soon the Treasury runs out of operating room under the debt ceiling.
The FDIC withdrawal from the Treasury General Account was many times larger than any previous largest draws, according to data from the Daily Treasury Statement for March 10 released late on Monday.
Combined with about $13 billion of other federal agency withdrawals on Friday, that left Treasury with just over $208 billion in operating funds at the TGA, which is held at the Federal Reserve. That was down by more than $100 billion from Wednesday’s TGA balance, reported by the Fed on Thursday.
“The big news … was a $40 billion cash withdrawal by the FDIC, which dragged the Treasury’s cash balance far below our day-ahead forecast,” analysts at Wrightson ICAP (LON:) said Tuesday.
Should the Treasury not be able to replace that, the “outflow would significantly increase the risk that the ‘X-date’ might arrive in June rather than July,” they said.
The so-called “X-date” is the point at which the Treasury exhausts the “extraordinary measures” it has been taking recently to keep paying federal government obligations while Congress and the White House wrangle over whether to lift the $31.4 trillion limit on the U.S. debt.
The FDIC withdrawal came the same day as Treasury Secretary Janet Yellen warned members of the Republican-controlled House of Representatives that a failure to lift the ceiling that results in a U.S. default would cause “economic and financial collapse.” Republican House members are insisting on large budget cuts and other concessions before agreeing to lift the limit.
Shortly after delivering that warning, Silicon Valley was taken over by the FDIC, and Yellen, alongside officials at the Fed, FDIC and other bank regulators, spent the weekend arranging emergency measures to prevent the failure of the No. 16 U.S. bank from triggering a wider financial crisis.
Wrightson’s analysts said there remains enormous uncertainty around when the X-date will arrive.
“Our basic debt ceiling outlook has not yet changed in light of Friday’s unprecedented FDIC outlay, but it could shift by the end of the week as more details become available,” they said.
Read the full article here
![](https://personalfinancedefined.com/wp-content/uploads/2023/02/pf-logo.png)
-
Personal Finance7 days ago
Gas prices drop as demand for driving fizzles out: AAA
-
Investing7 days ago
Crowdstrike CEO Responds to Causing Largest IT Outage in History
-
Side Hustles7 days ago
How to Build A Startup, From an Early Lyft, Twitch Investor
-
Passive Income7 days ago
The Top 5 AI Tools That Can Revolutionize Your Workflow and Boost Productivity
-
Passive Income5 days ago
NLRB Drops Expanded Joint Employer Appeal
-
Side Hustles7 days ago
Jake Paul: Mindset Hacks, Mike Tyson Fight, Embracing Fear
-
Investing7 days ago
Boeing to supply E-7 in first major win since plea deal By Reuters
-
Side Hustles6 days ago
10 Effective Growth Marketing Strategies for Your Startup