Treasury secretary rules out bailout for Silicon Valley Bank
Mar 12, 2023, 10:36 AM
Treasury Secretary Janet Yellen on Sunday ruled out a federal bailout for Silicon Valley Bank following its spectacular collapse last week. (Al Drago/Bloomberg via Getty Images)
(Al Drago/Bloomberg via Getty Images)
(CNN) — Treasury Secretary Janet Yellen on Sunday ruled out a federal bailout for Silicon Valley Bank following its spectacular collapse last week.
“Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out, and we’re certainly not looking,” Yellen told CBS News when asked if there will be a bailout. “And the reforms that have been put in place means that we’re not going to do that again.”
Also Sunday, Shalanda Young, the director of the White House Office of Management and Budget, stressed in an interview with CNN’s Kaitlan Collins on “State of the Union” that the US banking system at large was “more resilient” now.
“It has a better foundation than before the [2008] financial crisis. That’s largely due to the reforms put in place,” Young said on “State of the Union.”
Yellen said she’s been hearing from depositors all weekend, many of whom are “small businesses” and employ thousands of people. “I’ve been working all weekend with our banking regulators to design appropriate policies to address this situation,” the Treasury secretary said, declining to provide further details.
SVB collapsed Friday morning after a stunning 48 hours in which a bank run and a capital crisis led to the second-largest failure of a financial institution in US history.
California regulators closed down the tech lender and put it under the control of the US Federal Deposit Insurance Corporation. The FDIC is acting as a receiver, which typically means it will liquidate the bank’s assets to pay back its customers, including depositors and creditors.
Despite initial panic on Wall Street over the run on SVB, which caused its shares to crater, analysts said the bank’s collapse is unlikely to set off the kind of domino effect that gripped the banking industry during the financial crisis.
But the collapse has prompted a bailout debate in Washington as lawmakers assess the fallout.
Republican Rep. Nancy Mace of South Carolina told Collins in a separate interview on “State of the Union” that she doesn’t support a bailout “at this time” but cautioned, “It’s still very early.”
“We cannot keep bailing out private companies because there’s no consequences to their actions. People, when they make mistakes or break the law, have to be held accountable in this country,” she said.
While relatively unknown outside Silicon Valley, SVB was among the top 20 American commercial banks, with $209 billion in total assets at the end of last year, according to the FDIC. It’s the largest lender to fail since Washington Mutual collapsed in 2008.
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