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Washington – Treasury Secretary Janet Yellen said on Sunday that the federal government would not provide a bailout for the United States. Silicon Valley BankInvestor after there was a bank suddenly released the shutterbut said financial regulators were “concerned” about the impact on depositors and were working to address their needs.
“During the financial crisis, we had investors and big bank owners bailed out,” Yellen said in an interview with “Face the Nation” on Sunday. “And the reforms that have been implemented mean that we are not going to do it again. But we care about our depositors and are focused on meeting their needs. ”
On Sunday, the Treasury Department, Federal Reserve Board and FDIC announced that the government will guarantee deposits for SVB account holders. According to a joint statement issued by the two institutions, “Depositors will have access to all funds beginning Monday, March 13. Losses related to Silicon Valley Bank’s resolution will not be borne by taxpayers.” is not”.
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The Federal Reserve will reportedly make additional funds available to “qualified depository institutions” on Sunday to ensure banks have the capacity to meet the needs of all depositors. announced the creation of a new Bank Term Funding Program (BTFP) to release. “This measure will strengthen the banking system’s ability to protect deposits and ensure the continued supply of funds and credit to the economy.”
California regulators closed Silicon Valley banks on Friday after depositors rushed to withdraw funds last week over concerns about their balance sheets.The Federal Deposit Insurance Corporation (FDIC) has been appointed as the trustee, and the regulator has work to find Buyer of an institution that was ranked as the 16th largest bank in the United States before its bankruptcy.
The failure of the 40-year-old tech bank is the largest by a financial institution since Washington Mutual’s failure in 2008.
President Biden spoke with California Gov. Gavin Newsom about the federal government’s response to Silicon Valley banks on Saturday, and the FDIC spoke with members of the California legislative delegation late Saturday night.
Yellen said Treasury officials were speaking to depositors, many of them small businesses, in the wake of the Silicon Valley bank failure, and said they were working with bank regulators to make “appropriate decisions” to deal with the situation. He said he was “developing the right policies.” The FDIC is likely looking at a “range of available options,” including acquisitions by foreign banks, to stabilize the situation, she said.
“The American banking system is really secure, well capitalized, resilient,” she said. “In the aftermath of the 2008 financial crisis, new controls were put in place to enhance oversight of capital and liquidity, tested early in the pandemic and proven to be resilient to our banking system.”
Still, the shutdown of Silicon Valley Bank has raised concerns that it will lead to crackdowns on other smaller and regional banks. However, Yellen said financial regulators are working to prevent the impact from spreading to other institutions.
“I don’t want problems that exist in one bank to spread to other healthy banks,” she said. “The goal of surveillance and regulation is always to prevent contagion.”
In a joint statement, the Treasury Department, Federal Reserve Board and FDIC said steps were being taken to address the closure of another bank. “We are also announcing a similar systemic risk exception today for our signature bank in New York, New York, which has been closed by the state charter agency. All depositors at this institution will be fully “Like Silicon Valley Bank’s resolution, the loss will be borne by the taxpayer,” the statement said.
Following the closure of Silicon Valley Banks, the FDIC said it set up a deposit insurance company, the National Bank of Santa Clara, to which guaranteed deposits from Silicon Valley banks were quickly transferred. All insured depositors will have access to their insured deposits by Monday morning, while non-insured depositors will be able to receive their advance dividends within the next week. He said the FDIC. Future dividends may be paid to uninsured depositors as the FDIC sells his Silicon Valley Bank assets.
As of the end of 2022, Silicon Valley Banks had total assets of about $209 billion and total deposits of about $174.5 billion, according to the agency.
But a recent regulatory report estimated that more than 85% of Silicon Valley bank deposits were uninsured.
“We are very aware of the issues depositors will face,” Yellen said. , [we’re] We are working with regulators to address these concerns. “
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