Yellen says Silicon Valley Bank won’t receive bailout after collapse
The US treasury secretary, Janet Yellen, said on Sunday there will be no bailout for Silicon Valley Bank, which collapsed this week, raising fears of a banking crisis, but also said the Biden administration was working closely with regulators to help depositors hit by the fall of SVB.
Yellen said conditions did not match the 2008 financial crisis, when the collapse of large financial institutions threatened to bring down the global financial system.
“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 we are not going to do that again,” Yellen told CBS’s Face the Nation.
“But we are concerned about depositors and are focused on trying to meet their needs.”
The sudden failure of SVB, a California bank with assets valued at $212bn which primarily lent to tech start-ups, rattled investors and triggered calls for regulators to step in.
On Friday, SVB was placed under the control of the Federal Deposit Insurance Corporation (FDIC), which guarantees deposits to $250,000. But many companies and individuals stand to lose more than half of deposits in excess of that, according to some estimates.
Mark Warner, a Virginia Democrat on the US Senate banking committee, said SVB had been “caught in a bind” by higher interest rates. A run on the bank late last week – with $42bn withdrawn on Thursday alone – was accelerated by “some actors”, he told ABC’s This Week.
Warner said he had been in discussions with regulators, the White House and the Federal Reserve. The best outcome, he said, would be to find a buyer for SVB assets before markets opened in Asia late on Sunday.
“That would be best,” he said, adding:
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