US Treasury Secretary rules out federal bailout for Silicon Valley bank – Featured
US Treasury Secretary Janet Yellen has ruled out a government bailout for the collapsed Silicon Valley Bank (SVB), which was shut down by regulators on Friday. Yellen explained that reforms initiated after the 2008 financial crisis were aimed at preventing the need for government bailouts.
Government not considering bailout package for SVB, says Yellen
US Treasury Secretary Janet Yellen said in an interview aired on CBS News on Sunday that the government is not considering a bailout of the collapsed Silicon Valley Bank (SVB). The bank was shut down by regulators on Friday and placed under receivership by the Federal Deposit Insurance Corporation (FDIC).
Yellen was asked if the US government “needed to step in and take immediate action because of the SVB failure.” The Treasury Secretary replied: “The American economy depends on a safe and sound banking system capable of meeting the borrowing needs of our households and businesses. So when a bank, especially one like Silicon Valley Bank with billions of dollars in deposits, goes bust, that’s clearly a problem.” She continued:
I’ve been working with our banking regulators all weekend to draft appropriate policies to address this situation.
Yellen explained that “unique controls” were put in place to improve capital and liquidity oversight after the 2008 financial crisis and were tested in the early days of the Covid-19 pandemic. The system “proved its resilience so that Americans could have confidence in the safety and soundness of our banking system,” she claimed.
When asked if she had “ruled out” a government bailout for Silicon Valley Bank, the Treasury Secretary replied:
Let me be clear that during the financial crisis there were investors and owners of systemically important big banks that were bailed out and we are certainly not looking for them. And the reforms that have been introduced mean that we will not do it again.
While Yellen noted that she was unable to provide further details on the SVB situation at this time, she stressed, “The American banking system is really safe and well capitalized. It’s resilient.”
Yellen acknowledged that the government is “well aware that many start-up companies have deposits and venture capital firms have deposits with this bank that have been affected by its collapse,” stressing that “we are working to find a solution.” .”
After the collapse of the Silicon Valley bank, billionaire Bill Ackman, CEO and portfolio manager of Pershing Square Capital Management, warned of “far-reaching and profound” consequences if the US government allows the bank to fail without protecting all depositors. He also warned of possible bank runs starting Monday. Rich Dad Poor Dad author Robert Kiyosaki has warned that another bank is about to fail.
What do you think of US Treasury Secretary Janet Yellen’s comments? And do you think the government should bail out the SVB? Let us know in the comment section below.
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Source: Crypto News Deutsch