Yellen Says No to SVB Bailout, but Says Government Is Working to Help Depositors
The Treasury Secretary sought to ease concerns that the bank’s collapse could lead to a domino effect.
U.S. Treasury Secretary Janet Yellen said Sunday that while the federal government would not bail out Silicon Valley Bank (SVB), it's working to help affected depositors.
"The reforms that have been put in place means that we're not going to do [a bailout] again," said Yellen in an interview with CBS News' "Face the Nation."
She did note that federal government officials were "concerned" for depositors and are "focused on trying to meet their needs," however. Yellen also sought to calm fears that the bank’s collapse could lead to a domino effect. “The American banking system is really safe and well capitalized,” she said.
Roughly 85% of SVB depositors held money in accounts that were not FDIC-insured, meaning those funds could be irretrievable. The FDIC insures deposits up to $250,000 for each ownership category at FDIC-insured institutions, of which SVB was a member.
SVB, a 40-year-old bank, collapsed earlier this week following a $42 billion bank run. The withdrawal rush occurred shortly after SVB Financial Group announced on Wednesday its intentions to sell $2.24 billion in new shares in an attempt to compensate for having sold $21 billion of its portfolio's securities at a $1.8 billion loss. The news spooked high-profile venture capitalists, which prompted them to order their portfolio businesses to pull their money out of the bank, kickstarting a bank run. On March 10, just two days after the bank run began, the Federal Deposit Insurance Corporation (FDIC) seized SVB.
SVB's failure marks the largest bank blow-up in the history of the United States since Washington Mutual's collapse in 2008. SVB’s meltdown came just days after the collapse of crypto-focused bank Silvergate Capital.
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