Treasury secretary: No bailout for bank
Feds will aid depositors, but she gives no details
Treasury Secretary Janet Yellen ruled out a bailout from the federal government for now-collapsed Silicon Valley Bank, but she said the government will step in to help depositors in some capacity.
“We’re not going to do that again,” Yellen said on CBS’ “Face the Nation,” referring to the 2007-2009 financial crisis that led to a massive government rescue aimed at heading off a wider catastrophe. “But we are concerned about depositors and are focused on trying to meet their needs.”
She declined to provide specifics on steps the government will take.
“I simply want to say that we’re very aware of the problems that depositors will have; many of them are small businesses that employ people across the country,” Yellen said. “Of course, this is a significant concern.”
Silicon Valley Bank, a financial institution deeply connected with technology startups and venture capital, collapsed because of the downturn of technology stocks and the Federal Reserve’s interest hikes, ultimately resulting in a bank run that led to Friday’s collapse.
The Federal Deposit Insurance Corp. took over the bank and said that deposits will be available Monday morning, but the government only insures deposits up to $250,000 per depositor. A majority of the bank’s deposits are uninsured, given the customer base being largely composed of tech workers and venture capitalists.
The collapse, the second largest in U.S. history, roiled Wall Street ahead of Monday’s opening of the stock market. It is the biggest collapse of a financial institution since the demise of Washington Mutual in 2008.
Silicon Valley Bank’s parent company is searching for a buyer as a potential solution, Bloomberg reported.
“This is really a decision for the FDIC, as it decides on what the best course is to resolve this firm. And I’m sure they’re considering a wide range of available options. That would include acquisitions,” Yellen continued.
The bank’s failure has raised concern about a repeat of the 2008 financial crisis, but Yellen sought to reassure Americans the collapse is an isolated incident. “What I do want to do is emphasize that the American banking system is really safe and well-capitalized; it’s resilient,” said Yellen.