WASHINGTON – Treasury Secretary Janet Yellen said Sunday that the federal government will not provide a bailout for Silicon Valley BankAfter the banks were the investors sudden stopBut said financial regulators are “concerned” about the impact on depositors and are working to meet their needs.
“During the financial crisis, there were investors and systemically large banks bailed out,” Yellen said in an interview with “Face the Nation” on Sunday. “And the reforms that have been put in place mean that we’re not going to do that anymore. But we’re concerned about depositors and focused on trying to meet their needs.”
California regulators shut down 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 working to find A buyer for the firm, which ranked as the 16th largest bank in the US before it failed.
The collapse of the 40-year-old bank, which catered to the technology industry, is the largest of a financial institution since the failure of Washington Mutual in 2008.
President Biden spoke with California Governor Gavin Newsom on Saturday about Silicon Valley banks and the federal response, and the FDIC spoke with members of California’s congressional delegation late Saturday night.
Yellen said that in the wake of the Silicon Valley bank failure, Treasury officials had heard from depositors, many of them small businesses, and that she was working with bank regulators to “design appropriate policies” to address the situation, though she denied it. Please provide more details. The FDIC, he said, is likely considering “a range of available options” to stabilize the situation, which could include an acquisition by a foreign bank.
“The American banking system is really safe and well capitalized. It’s resilient,” he said. “After the 2008 financial crisis, new regulations were put in place, better capital and liquidity supervision, and it was tested in 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, the Silicon Valley bank’s shutdown has prompted nervousness about whether it could trigger a run on other small and regional banks. Yellen, however, said financial regulators were working to prevent spillovers to other institutions.
“We want to make sure that the problems that exist in one bank do not cause contagion to others which is right,” he said. “The goal of surveillance and control is always to ensure that contagion does not occur.”
After Silicon Valley Bank closed, the FDIC said it created the Deposit Insurance National Bank of Santa Clara, where insured deposits from Silicon Valley Bank were immediately transferred. All insured depositors will have access to their insured deposits by Monday morning, while insured depositors will receive advance dividends by next week, the FDIC said. Future dividends may be paid to uninsured depositors as the FDIC sells Silicon Valley bank assets.
According to the agency, as of the end of 2022, Silicon Valley Bank had total assets of about $209 billion and total deposits of about $174.5 billion.
But a recent regulatory filing estimated that more than 85% of Silicon Valley banks’ deposits were uninsured.
“We are very aware of the problems that depositors will have,” Yellen said. “A lot of them are small businesses that employ people across the country and certainly that’s a significant concern and (we’re) working with regulators to try to address those concerns.”