No Bailout For Collapsed Silicon Valley Bank, Yellen Says

Janet Yellen, Treasury Secretary, stated Sunday that no bailout would be provided for the bank’s collapse at Silicon Valley Bank.

Participating on CBS News “Face The Nation” Margaret Brennan was the host. Yellen stated that the government would help regulators protect depositors, but clarified that there would not be a federal bailout for major tech banks. 

“Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out,” Yellen Telled Brennan was asked by Brennan if the U.S. has ruled out a bailout. “And the reforms that have been put in place means that we’re not going to do that again. But we are concerned about depositors and are focused on trying to meet their needs.” 

If the government would bail out banks in the same way it did during the 2008 crisis. @SecYellen says, “We’re not going to do that again.” She adds: “We are concerned about depositors and are focused on trying to meet their needs.” pic.twitter.com/sg5WBFWfPj

— Face The Nation (@FaceTheNation) March 12, 2023

Brennan observed that about 85% of the accounts were not insured and asked Yellen if depositors should be repaid in full.

Yellen stated that she would not reveal specific details, but that the government is. “very aware of the problems that depositors will have, many of them are small businesses that employ people across the country. And of course, this is a significant concern, and working with regulators to try to address these concerns.”

Silicon Valley Bank Announced A $1.75 Billion share Sale On Wednesday, the financial institution suffered severe losses after liquidating a $21 million bond portfolio. This raised concerns among venture capital firms as well as startups that have ties to the company regarding the safety of their assets. SVB is the 16th-largest US bank and Silicon Valley’s biggest, lending to almost half the venture-backed healthcare and technology companies.

Federal Deposit Insurance Corporation, (FDIC) stated Friday that SVB has been closed by California Department of Financial Protection and Innovation. According to a press release, insured depositors will be able to access their funds by Monday morning. Release The government-backed company will pay the advance dividend, while those who are not insured can receive it in the coming week. 

“At the time of closing, the amount of deposits in excess of the insurance limits was undetermined,” According to the FDIC. “The amount of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers.”

Charles Gasparino is a Fox Business Network senior reporter reported Initial depositors would be paid 30 to 50% of their money Monday. “most of the rest” In time, citing sources who are familiar with the matter. 

SVB’s implosion will be the most severe bank failure since Washington Mutual collapsed in 2008 According To Axios.

Yellen argued that bank failures don’t always mean the same problems for other banks. She stated: “supervision and regulation” This will assist in preventing “contagion.” 

“What I do want to do is emphasize that the American banking system is really safe and well-capitalized, it’s resilient,” Yellen stated. “In the aftermath of the 2008 financial crisis, unique controls were put in place, better capital and liquidity supervision, and it was tested during the early days of the pandemic, and proved its resilience so Americans can have confidence in the safety and soundness of our banking system,” She argued. 

Former presidents George W. Bush, Barack Obama and others introduced government bailouts for investment and commercial banks during 2008’s Great Recession. This was a time when financial institutions were more exposed to subprime mortgages.

Ben Zeisloft contributed this report. 

“From Yellen says no bailout for Silicon Valley Bank’s collapse“

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