The decade's most triggering comedy
Treasury Secretary Janet Yellen said Sunday that there would be no bailout for the collapsed Silicon Valley Bank.
Appearing on CBS News’s “Face The Nation” with host Margaret Brennan, Yellen said the government would assist regulators in helping protect depositors but made clear that there would be no federal bailout for the major tech bank.
“Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out,” Yellen told Brennan when asked whether the U.S. had 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.”
Asked whether the government might bail out banks as it did during the 2008 crisis, @SecYellen says, “We’re not going to do that again.” But 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 noted that roughly 85% of the accounts were uninsured and asked Yellen whether she thought depositors should be paid back in full.
Yellen said she wouldn’t disclose specific details but said 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 after the financial institution suffered heavy losses from liquidating a $21 billion bond portfolio, raising concerns among venture capital firms and startups with ties to the company about the safety of their assets. SVB, the 16th-largest bank in the United States and the largest in Silicon Valley, lends to nearly half of publicly traded venture-backed technology and healthcare companies.
The Federal Deposit Insurance Corporation (FDIC) said on Friday that SVB was closed by the California Department of Financial Protection and Innovation. Insured depositors will have access to funds by Monday morning, according to a press release from the government-backed firm, while uninsured depositors can expect an advance dividend in the next week.
“At the time of closing, the amount of deposits in excess of the insurance limits was undetermined,” the FDIC said. “The amount of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers.”
Fox Business Network senior correspondent Charles Gasparino reported depositors would initially receive 30 to 50% of their money on Monday, and “most of the rest” in time, citing sources familiar with the matter.
The implosion of SVB would mark the largest bank failure since Washington Mutual collapsed in late 2008, according to Axios.
With regard to potential failures at other banks, Yellen argued that one bank’s troubles don’t necessarily mean similar problems for another. She said “supervision and regulation” will help prevent “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.
The administrations of former presidents George W. Bush and Barack Obama previously introduced government bailouts for commercial and investment banks during the Great Recession of 2008, during which financial institutions were overexposed to subprime mortgages.
Ben Zeisloft contributed to this report.