Treasury
Secretary Janet Yellen says U.S. government won’t bail out Silicon Valley Bank
PUBLISHED SUN, MAR 12 202311:10 AM EDT
KEY POINTS
·
Treasury Secretary Janet
Yellen said the U.S. government will not bail out Silicon Valley Bank.
·
“The reforms that have
been put in place means that we’re not going to do that again,” Yellen told
CBS’ “Face the Nation.”
·
Regulators shuttered Silicon
Valley Bank and seized its deposits Friday after depositors withdrew more than
$42 billion by the end of the day Thursday.
Janet Yellen, US Treasury secretary, speaks during
a Financial Stability Oversight Council (FSOC) meeting at the Treasury
Department in Washington, DC, US, on Friday, Dec. 16, 2022.
Ting Shen | Bloomberg | Getty Images
After regulators shuttered Silicon
Valley Bank and seized
its deposits Friday, U.S. Treasury Secretary Janet Yellen said Sunday
that she has been working “to address the situation in a timely way,” but that
a major government bailout is not on the table.
“Let me be clear that during the financial
crisis, there were investors and owners of systemic large banks that were
bailed out, and the reforms that have been put in place means that we’re not
going to do that again,” Yellen told CBS’ “Face the Nation.” “But we are
concerned about depositors and are focused on trying to meet their needs.”
SVB’s spectacular implosion began late
Wednesday, when it surprised investors with news that it needed to raise $2.25
billion to shore up its balance sheet. Reassurances from SVB’s CEO
were not enough to stop the bank run, and depositors withdrew more than $42
billion by the end of the day Thursday, setting the stage for the
second-largest bank failure in U.S. history.
The Federal Deposit Insurance Corporation
(FDIC) said Friday that it will cover up to $250,000 per
depositor and may be able to begin paying those depositors as early as Monday.
But the vast majority of SVB’s customers were businesses that had kept far
greater uninsured amounts at the bank, which sparked broad concerns about how
people will be able to retrieve the rest of their funds.
Yellen said regulators are considering a wide
range of options for SVB, including acquisitions.
“This is really a decision for the FDIC, as it
decides on what the best course is to resolve this firm,” Yellen said.
Former FDIC Chair Sheila Bair said Sunday that
finding a buyer for SVB is “the best outcome.”
“The problem is this was a liquidity failure,
it was a bank run, so they didn’t have time to prepare to market the bank,”
Bair told NBC’s “Meet the Press.” “They’re having to do that now and playing
catch up.”
The fallout of SVB’s collapse could be far-reaching.
Startups may be unable
to pay employees in the coming days, venture investors may struggle to
raise funds, and an already-battered sector could face a deeper malaise.
Bair said the FDIC could help companies with
payroll in the case that there’s a systemic risk exception, which would be “an
extraordinary procedure.” She said she thinks it is going to be “hard to say
that this is systemic in any way.”
Sen. Mark Warner, D-Va., said
Sunday that the best outcome would be finding a buyer for SVB before the
markets open in Asia. Warner said he is feeling more optimistic that the FDIC
will find a solution than he was Saturday afternoon.
“The shareholders in the bank are going
to lose their money, let’s be clear about that. But the depositors can be taken
care of,” he told ABC’s “This Week.”
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