US Treasury Secretary Yellen rules out bailout for Silicon Valley Bank
The collapse of the 40-year-old bank, which catered to the tech industry, is the largest of a financial institution since the failure of Washington Mutual in 2008
US Treasury Secretary Janet Yellen on Sunday said that the federal government will not provide a bailout for Silicon Valley Bank's investors after the bank was abruptly shuttered, but said financial regulators are "concerned" about the impact to depositors and working to address their needs, media reports said.
"During the financial crisis, there were investors and owners of systemic large banks that were bailed out," Yellen said in an interview, CBS News reported.
"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."
California regulators shut down the Silicon Valley Bank on Friday after depositors rushed to withdraw money last week amid concerns about its balance sheet. The Federal Deposit Insurance Corporation (FDIC) was appointed receiver, and regulators are working to find a buyer for the institution, which ranked as the 16th-largest bank in the US before its failure.
The collapse of the 40-year-old bank, which catered to the tech industry, is the largest of a financial institution since the failure of Washington Mutual in 2008.
President Joe Biden spoke to California Governor Gavin Newsom about Silicon Valley Bank and the federal response on Saturday, and the FDIC spoke to members of the California congressional delegation late Saturday night.
Yellen said that in the wake of Silicon Valley Bank's failure, Treasury officials have been hearing from depositors, many of which are small businesses, and she has been working with bank regulators to "design appropriate policies" to address the situation, though she declined to provide further details.
The FDIC, she said, is likely considering a "range of available options" to stabilise the situation, which could include an acquisition by a foreign bank, CBS News reported.
"The American banking system is really safe and well-capitalised. It's resilient," she said. "In the aftermath of the 2008 financial crisis, new 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."
Still, Silicon Valley Bank's shutdown has prompted nervousness about whether it could trigger a run on other small and regional banks. Yellen, though, said financial regulators are working to prevent the fallout from spreading to other institutions, CBS News reported.
"We want to make sure that the troubles that exist at one bank don't create contagion to others that are sound," she said. "The goal always of supervision and regulation is to make sure that contagion can't occur."
"We're very aware of the problems that depositors will have," Yellen said, CBS News reported. "Many of them are small businesses that employ people across the country, and of course this is a significant concern and [we're] working with regulators to try to address these concerns."