US Treasury Secretary Janet Yellen has said that the government is working to address the concerns of depositors and small businesses affected by the failure of Silicon Valley Bank, which suffered the biggest US bank failure since the 2008 financial crisis. Speaking in an interview with CBS News journalist Margaret Brennan, Yellen said that the collapse of the bank was a concern for America’s economy, which relies on a safe and sound banking system that can provide for the credit needs of households and businesses.
Yellen said that she had been working all weekend with banking regulators to design appropriate policies to address the situation and emphasized that the American banking system is safe and well-capitalized.
She said that new controls were put in place after the 2008 financial crisis to improve capital and liquidity supervision and that the system was tested during the early days of the pandemic and proved its resilience.
Asked whether the problems were unique to Silicon Valley Bank or whether there will be other regional bank failures, Yellen said that the goal of supervision and regulation is to make sure that contagion can’t occur. She said that the government is concerned about depositors and focused on trying to meet their needs.
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Yellen was asked whether the US government had ruled out a bailout of Silicon Valley Bank, given that the UK government had ruled out a bailout of the UK arm of the bank. Yellen said that during the financial crisis, investors and owners of systemic large banks were bailed out, but the reforms put in place mean that the government is not looking to do that again. However, she said that the government is focused on addressing the needs of depositors, many of whom are small businesses that employ people across the country.
Yellen was asked whether depositors should be paid back in full, given that about 85% of SVB’s accounts were uninsured. She declined to comment on the details of the situation but said that the government is aware of the problems that depositors will have and is working with regulators to try to address these concerns.
Asked whether a deal or something could be done to reassure the markets before Asian markets open tonight and US markets open tomorrow, Yellen said that the government is working to address the situation in a timely way.
Finally, Yellen was asked about the impact of Silicon Valley Bank’s failure on the tech sector, which has already been suffering from layoffs and is under pressure. Yellen said that she couldn’t comment on the impact until the situation is resolved but said that many startup firms have deposits and venture capital firms have deposits at the bank that have been affected by its failure.
Overall, Yellen’s comments emphasized the government’s focus on addressing the needs of depositors and small businesses affected by Silicon Valley Bank’s failure, while also reassuring the markets that the American banking system is safe and well-capitalized. She declined to comment on the details of the situation or whether depositors will be paid back in full, but said that the government is working to address the situation in a timely way.