Treasury Secretary Janet Yellen said regulators are working through the weekend to resolve the collapse of Silicon Valley Bank with a particular focus on depositors, rather than bailing out investors, though she declined to provide details of possible solutions.
(Bloomberg) — Treasury Secretary Janet Yellen said regulators are working through the weekend to resolve the collapse of Silicon Valley Bank with a particular focus on depositors, rather than bailing out investors, though she declined to provide details of possible solutions.
Yellen renewed assurances that the US banking system is safe, well-capitalized and resilient in an interview with CBS’s “Face the Nation” on Sunday. She said officials are “working to address this situation in a timely way” when asked whether solutions would be presented before markets open in Asia on Monday.
“During the financial crisis there were investors and owners of systemic large banks that were bailed out,” she said. “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 we’re focused on trying to meet their needs.”
The Federal Deposit Insurance Corp. and the Federal Reserve are weighing creating a fund that would allow regulators to backstop more deposits at banks that run into trouble following Silicon Valley Bank’s collapse, according to people familiar with the matter. Regulators discussed the new special vehicle in conversations with banking executives, the people said.
“I simply want to say that we’re very aware of the problems that depositors will have,” Yellen said. “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.”
US regulators overseeing the breakup of the bank’s parent, SVB Financial Group, are under pressure to sell assets, prompting offers by some investment firms to provide financing to companies with cash trapped at Silicon Valley Bank.
Asked whether the FDIC might be open to a “foreign bank” coming in as a buyer, Yellen said, “I’m sure they’re considering a wide range of available options that include acquisitions.”
While the FDIC insures deposits of up to $250,000, the vast majority of funds held in at SVB far exceeded that. The agency has said it will make 100% of protected deposits available on Monday.
Republican presidential candidate Nikki Haley said Saturday that US taxpayers shouldn’t bail out Silicon Valley Bank. “Private investors can purchase the bank and its assets,” Haley, a former South Carolina governor and US ambassador to the United Nations, said in a statement.
The White House repeated its assurances on the US banking system, with Office of Management and Budget Shalanda Young citing regulatory changes put in place after the financial crisis more than a decade ago.
“What I’ll say about the banking system overall is it’s more resilient, and has a better foundation than before the financial crisis,” Young said on CNN’s “State of the Union.”
“Americans can have confidence in the safety and soundness of our banking system” and the US economy is “extremely strong,” Yellen said on CBS.
(Updates with more Yellen quotes starting in fifth paragraph.)
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