Janet Yellen, US Treasury secretary, speaks during a Financial Stability Oversight Council (FSOC) meeting on the Treasury Department in Washington, DC, US, on Friday, Dec. 16, 2022.
Ting Shen | Bloomberg | Getty Images
After regulators shuttered Silicon Valley Bank and seized its deposits Friday, U.S. Treasury Secretary Janet Yellen said Sunday that she has been working “to handle the situation in a timely way,” but that a significant government bailout isn’t on the table.
“Let me be clear that in the course of the financial crisis, there have been investors and owners of systemic large banks that were bailed out, and the reforms which have been put in place implies that we’re not going to try this again,” Yellen told CBS’ “Face the Nation.” “But we’re concerned about depositors and are focused on trying to satisfy their needs.”
related investing news
SVB’s spectacular implosion began late Wednesday, when it surprised investors with news that it needed to lift $2.25 billion to shore up its balance sheet. Reassurances from SVB’s CEO weren’t enough to stop the bank run, and depositors withdrew greater than $42 billion by the end of the day Thursday, setting the stage for the second-largest bank failure in U.S. history.
The Federal Deposit Insurance Corporation (FDIC) said Friday that it’ll cover as much as $250,000 per depositor and will have the option to start paying those depositors as early as Monday. However the overwhelming majority of SVB’s customers were businesses that had kept far greater uninsured amounts on the bank, which sparked broad concerns about how people will have the option to retrieve the remaining of their funds.
Yellen said regulators are considering a wide selection of options for SVB, including acquisitions.
“This is admittedly a call for the FDIC, because it decides on what the most effective course is to resolve this firm,” Yellen said.
Former FDIC Chair Sheila Bair said Sunday that finding a buyer for SVB is “the most effective end result.”
“The issue is that this was a liquidity failure, it was a bank run, so that they did not have time to arrange to market the bank,” Bair told NBC’s “Meet the Press.” “They’re having to try this now and playing catch up.”
The fallout of SVB’s collapse might be far-reaching. Startups could also be unable to pay employees in the approaching days, enterprise investors may struggle to lift funds, and an already-battered sector could face a deeper malaise.
Bair said the FDIC could help firms with payroll within the case that there is a systemic risk exception, which can be “a unprecedented procedure.” She said she thinks it’s going to be “hard to say that that is systemic in any way.”
Sen. Mark Warner, D-Va., said Sunday that the most effective end result can be finding a buyer for SVB before the markets open in Asia. Warner said he’s feeling more optimistic that the FDIC will find an answer than he was Saturday afternoon.
“The shareholders within the bank are going to lose their money, let’s be clear about that. However the depositors could be taken care of,” he told ABC’s “This Week.”
