Yellen: No Federal Bailout for Collapsed Silicon Valley Bank

Treasury Secretary Yellen said Sunday that the federal government would not bail out Silicon Valley Bank, but is working to help depositors who are concerned about their money.The Federal Deposit Insurance Corporation insures deposits up to $250,000, but many of the companies and wealthy individuals who used the bank — known for its relationships with technology startups and venture capital — had more than that amount in their account. There are fears that some workers across the country won’t receive their paychecks.Ms. Yellen, in an interview with Columbia Broadcasting System’s “Face the Nation,” provided few details on the government’s next steps. She emphasized, though, that the situation was much different from the financial crisis almost 15 years ago, which led to bank bailouts to protect the industry.“We’re not going to do that again,” Ms. Yellen said. “But we are concerned about depositors, and we’re focused on trying to meet their needs.” With Wall Street rattled, Ms. Yellen tried to reassure Americans that there will be no domino effect after the collapse of Silicon Valley Bank. “The American banking system is really safe and well capitalized,” she said. “It’s resilient.”Silicon Valley Bank is the nation’s 16th-largest bank. It was the second biggest bank failure in American history after the collapse of Washington Mutual in 2008. The bank served mostly technology workers and venture capital-backed companies, including some of the industry’s best-known brands.Silicon Valley Bank began its slide into insolvency when its customers, largely technology companies that needed cash as they struggled to get financing, started withdrawing their deposits. The bank had to sell bonds at a loss to cover the withdrawals, leading to the largest failure of an American financial institution since the height of the financial crisis.Ms. Yellen described rising interest rates, which have been increased by the Federal Reserve to combat inflation, as the core problem for Silicon Valley Bank. Many of its assets, such as bonds or mortgage-backed securities, lost market value as rates climbed.“The problems with the tech sector aren’t at the heart of the problems at this bank,” she said. Ms. Yellen said she expected regulators to consider “a wide range of available options,” including the acquisition of Silicon Valley Bank by another institution. So far, however, no buyer has stepped forward.The executive vice president of the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness, Tom Quaadman, said in a statement that “we urge the administration to facilitate a quick acquisition, guaranteeing all bank depositors have access to their cash.”Regulators seized the bank’s assets on Friday. Deposits that are insured by the federal government are supposed to be available by Monday morning.“I’ve been working all weekend with our banking regulators to design appropriate policies to address this situation,” Ms. Yellen said. “I can’t really provide further details at this time.”Speaker McCarthy told Fox News Channel’s “Sunday Morning Futures” that he hoped the administration would announce the next steps as soon as Sunday.“They do have the tools to handle the current situation, they do know the seriousness of this and they are working to try to come forward with some announcement before the markets open,” he said.Mr. McCarthy also expressed hope that Silicon Valley Bank would be purchased. “I think that would be the best outcome to move forward and cool the markets and let people understand that we can move forward in the right manner,” he said.Senator Warner of Virginia said in an interview with ABC News’ “This Week” that he was concerned that the bank’s collapse could prompt nervous people to transfer money from other regional banks to larger institutions.“We don’t want further consolidation,” he said. Mr. Warner suggested there would be a “moral hazard” in reimbursing depositors in excess of the $250,000 limit and said an acquisition would be the best next step.“I’m more optimistic this morning than I was yesterday afternoon at this time,” he said. “But, again, we will see how this plays out during the rest of the day.” He added: “What we’ve got to focus on right now is how do we make sure there’s not contagion.”President Biden and Governor Newsom of California spoke about “efforts to address the situation” on Saturday, although the White House did not provide additional details on next steps.Mr. Newsom said the goal was to “stabilize the situation as quickly as possible, to protect jobs, people’s livelihoods, and the entire innovation ecosystem that has served as a tent pole for our economy.”Associated Press. Hope Yen contributed to this report from Washington.

Yellen: No Federal Bailout for Collapsed Silicon Valley Bank

Yellen: No Federal Bailout for Collapsed Silicon Valley Bank

More from the New York Sun

‘Union County’ Brings Authenticity to an Opoid-Addiction Drama

Scientists Grow High-Protein in Lettuce Using Gene Gun Technology

ACLU Tries To Force FCC To Hand Over Records Related to ABC Early License Renewal Process

Taylor Swift the Latest Victim of Far Left’s Demands To ‘Tax the Rich’

CNN Panel Erupts Over Republican Ad Campaign Using El-Sayed’s Full Name

‘Two Ships’ That Launched Incompatible Strands of American Culture

The Truth Is Still Out There as Chris Carter Reclaims ‘The X-Files’

Inflation Down, Manufacturing Up, Trumpian Free Enterprise Is Working

More from the New York Sun

‘Union County’ Brings Authenticity to an Opoid-Addiction Drama

Scientists Grow High-Protein in Lettuce Using Gene Gun Technology

ACLU Tries To Force FCC To Hand Over Records Related to ABC Early License Renewal Process

Taylor Swift the Latest Victim of Far Left’s Demands To ‘Tax the Rich’

CNN Panel Erupts Over Republican Ad Campaign Using El-Sayed’s Full Name

‘Two Ships’ That Launched Incompatible Strands of American Culture

The Truth Is Still Out There as Chris Carter Reclaims ‘The X-Files’

Inflation Down, Manufacturing Up, Trumpian Free Enterprise Is Working