• U.S Treasury Secretary Janet Yellen ruled out a government bailout for the collapsed Silicon Valley Bank (SVB), which was shut down by regulators on Friday.
• Yellen explained that the reforms put in place after the 2008 financial crisis were aimed at preventing the need for government bailouts.
• She also noted that the American banking system is safe and well-capitalized, and they are working to resolve the situation regarding deposits from startup firms and venture capital firms.
Government Not Considering a Bailout for SVB
U.S. Treasury Secretary Janet Yellen stated in an interview on CBS News, aired Sunday, that the government is not considering a bailout for the collapsed Silicon Valley Bank (SVB). The bank was shut down by regulators on Friday and put into receivership by the Federal Deposit Insurance Corporation (FDIC).
Reforms Put in Place After 2008 Financial Crisis
Yellen explained that in the aftermath of the 2008 financial crisis, „unique controls“ were put in place to enhance capital and liquidity supervision, and they were tested during the early days of the Covid-19 pandemic. The system „proved its resilience so Americans can have confidence in the safety and soundness of our banking system,“ she claimed. Responding to a question about whether she has „ruled out“ a government bailout of Silicon Valley Bank, Yellen detailed: 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. And the reforms that have been put in place means that we’re not going to do that again.
Resolving Situation Regarding Deposits from Startups & Ventures
Yellen acknowledged that the government is „well aware that many startup firms have deposits and venture capital firms have deposits at this bank that have been affected by its failure,“ emphasizing that „this is something we’re working to try to resolve.“ Following the collapse of Silicon V she could not provide further details on SVB situation but assured Americans with her statement: “The American banking system is really safe and well-capitalized” claiming “It’s resilient.“
America’s Economy Relying On Safe & Sound Banking System
Yellen was asked whether U.S government needs to „intervene and take emergency measures because of SVB failure.“ The treasury secretary replied: “America’s economy relies on a safe and sound banking system