The feds will not bail out Silicon Valley Bank, but they will try to help concerned clients who have money on deposit with the failing institution, Treasury Secretary Janet Yellen said Sunday.
Deposits up to $250,000 are insured by the Federal Deposit Insurance Corporation, and many tech startups had more than that in their California bank accounts.
The failure of Silicon Valley Bank, which does much of its business with technology startups and venture capital, is the second largest bank failure in the nation’s history, after the collapse of Washington Mutual in 2008.
Yellen said on CBS’s “Face the Nation” that the case of the Silicon Valley bank It was very different from the financial crisis when Washington Mutual went bankrupt and the government bailed out the banks to protect the financial industry.
“We’re not going to do that again,” Yellen said. “But we are concerned about depositors and we are focused on trying to meet their needs.
“The US banking system is really safe and well capitalized,” he added. “It’s tough.”
The Treasury secretary pointed out that rising interest rates, used to fight inflation, are Silicon Valley’s problem because many of its assets lost market value as rates rose.
When Silicon Valley tech clients needing cash to finance began accessing their accounts, the bank had to sell loss-making bonds to cover the withdrawals. Regulators seized its assets on Friday.
“The problems with the technology sector are not at the center of the problems of this bank,” he said.
Yellen noted that she is working closely with banking regulators who are looking at “a wide range of available options,” including the acquisition of Silicon Valley by another financial institution.
House Speaker Kevin McCarthy told Fox News Channel’s “Sunday Morning Futures” that he expected the bank to be bought.
“I think that would be the best result to move forward and cool the markets and let people understand that we can move forward in the right way,” the California Republican said.
with cable news services
