Wilmington, Del. (AP) – Treasury Secretary Janet Yellen said Sunday that the federal government would not bail out Silicon Valley Bankbut working to help depositors who are worried about their money,
The Federal Deposit Insurance Corporation insures deposits up to $250,000, but many companies and wealthy individuals who used Bank — known for his ties to technology startups and venture capital — had more than that amount in his account. There are apprehensions that some employees across the country will not get their salaries.
Yellen gave some insight into the government’s next steps in an interview with CBS’s “Face the Nation.” but he insisted the situation was very different From the financial crisis about 15 years ago, which led to bank bailouts to protect the industry.
“We’re not going to do that again,” she said. “But we are concerned about depositors, and we are focused on trying to meet their needs.”
rattle with wall streetYellen tried to reassure Americans that there would be no domino effect following the collapse of the Silicon Valley bank.
“The US banking system is really safe and well capitalised,” she said. “It’s flexible.”
Silicon Valley Bank is the 16th largest bank in the country. It was the second largest bank failure in US history after the collapse of Washington Mutual in 2008. The bank served mostly technology workers and venture capital-backed companies, including some of the best-known brands in the industry.
Silicon Valley Bank began filing bankruptcy when its customers, largely technology companies that needed cash as they struggled to obtain financing, began withdrawing their deposits. The bank had to sell bonds at a loss to cover the withdrawals, leading to the biggest failure of a US financial institution since the height of the financial crisis.
Yellen described rising interest rates, which have been raised by the Federal Reserve To combat inflation as the main problem for Silicon Valley Bank. Many of its assets, such as bonds or mortgage-backed securities, lost market value as rates climbed.
“The problems of the technology sector are not at the heart of this bank’s problems,” she said.
Yellen said she expected regulators to consider “a wide range of options available,” including an acquisition of the Silicon Valley bank by another entity. However, no buyer has come forward so far.
The regulators attached the bank’s assets on Friday. Deposits insured by the federal government should be available by Monday morning.
“I have been working throughout the weekend with our banking regulators to design appropriate policies to deal with this situation,” Yellen said. “I really can’t provide any more details at this time.”
President Joe Biden and Gov. Gavin Newsom, D-Calif., spoke Saturday about “efforts to address the situation,” although the White House did not provide additional details on next steps.
Newsom said the goal was to “stabilize the situation as quickly as possible, protecting jobs, people’s livelihoods and the entire innovation ecosystem that has served as the tent pole for our economy.”