U.S. Treasury Secretary Janet 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 US, many of the companies and wealthy people who used the bank — known for its relationships with technology startups and venture capital — had more than that amount in their accounts. There are fears that some workers across the country won't receive their paycheques.
Yellen, in an interview with CBS's Face the Nation, provided few details on the government's next steps. But she emphasized 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," she said. "But we are concerned about depositors, and we're focused on trying to meet their needs."
With Wall Street rattled, Yellen tried to reassure Americans that there will be no domino effect after the collapse of Silicon Valley Bank.
American banking system 'really safe,' Yellen says
"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 U.S. 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 a U.S. financial institution since the height of the financial crisis.
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.
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.
Tom Quaadman, executive vice-president of the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness, 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," Yellen said. "I can't really provide further details at this time."
House Speaker Kevin McCarthy, a Republican from California, 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.
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.
Bank of London tables offer for U.K. subsidiary
Bank of London has tabled an offer to Silicon Valley Bank UK, SVB's subsidiary, the company said on Sunday, adding that it had sent the proposals to British authorities, including the Treasury and the Bank of England.
Bank of London, a clearing bank, is leading a consortium of investors including private equity funds, which has submitted what it described as formal proposals.
"Silicon Valley Bank cannot be allowed to fail given the vital community it serves," Bank of London co-founder and CEO Anthony Watson said in a statement.
"This is a unique opportunity to ensure the U.K. has a more diversified banking sector, whilst allowing continuity of service to SVB's U.K. client base," he said.
The Bank of England has said it is seeking a court order to place the U.K. arm into insolvency.
https://news.google.com/rss/articles/CBMiU2h0dHBzOi8vd3d3LmNiYy5jYS9uZXdzL3dvcmxkL3NpbGljb24tdmFsbGV5LWJhbmstYmFpbG91dC15ZWxsZW4tdHJlYXN1cnktMS42Nzc2NTEw0gEgaHR0cHM6Ly93d3cuY2JjLmNhL2FtcC8xLjY3NzY1MTA?oc=5
2023-03-12 20:04:12Z
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