Janet Yellen said in an interview on March 12 that U.S. regulators are working to address Silicon Valley Bank collapse, but not considering a major bailout.
United States Treasury Secretary Janet Yellen is reportedly working with regulators to address Silicon Valley Bank collapse and protect investors, but not considering a major bailout.
Yellen made the comments during an interview with CBS News on March 12, claiming that regulators are designing “appropriate policies to address the situation” at the bank. She stated:
“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. But we are concerned about depositors and are focused on trying to meet their needs.”
Regarding the fact that most accounts at SVB are unsecured, Yellen noticed that regulators are “very aware of the problems that depositors will have, many of them are small businesses that employ people across the country. And of course, this is a significant concern, and working with regulators to try to address these concerns.”
Yellen also spoke about the possibility of other regional American banks being affected by the Silicon Valley collapse:
“Let me just say that we want to make sure that the troubles that exist at one bank don’t create contagion to others that are sound. And the goal always is supervision and regulation is to make sure that contagion can’t occur.”
Data from the Federal Reserve shows that small banks in the U.S. had $6.8 trillion in assets and $680 billion in equity as of February 2023. A failure on the tech bank would put in “risk of a run on thousands of small banks,” as reported by Cointelegraph.
Related: Silicon Valley Bank failure could trigger run on US regional banks
Silicon Valley Bank is one of the top 20 largest banks in the United States, providing banking services to many crypto-friendly venture firms. According to a Castle Hill report, assets from Web3 venture capitalists totaled more than $6 billion at the bank, including $2.85 billion from Andreessen Horowitz, $1.72 billion from Paradigm and $560 million from Pantera Capital.
According to Yellen, the Federal Deposit Insurance Corporation is considering “a wide range of available options,” including allowing the acquisition of SVB by a foreign bank. “We certainly are working to address the situation in a timely way,” she noted.
Silicon Valley was shut down by California’s financial watchdog on March 10 after announcing a significant sale of assets and stocks aimed at raising $2.25 billion capital to shore up operations. The FDIC was appointed as the receiver to protect insured deposits. However, the FDIC only insures up to $250,000 per depositor, per institution and per ownership category.
Sourced from cointelegraph.com.
Written by Ana Paula Pereira on 2023-03-14 01:53:58.