Treasury Secretary Janet Yellen said that the US government will not bail out the Silicon Valley bank

Janet Yellen, US Secretary of the Treasury, speaks during a meeting of the Financial Stability Oversight Board (FSOC) at the Treasury Department in Washington, D.C., US, on Friday, December 16, 2022.

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After regulators shut down the Silicon Valley bank and seized its deposits on Friday, US Treasury Secretary Janet Yellen said Sunday she was working to “remediate the situation at the appropriate time,” but a major government bailout is not on the table.

“Let me make clear that during the financial crisis, there were investors and owners of large, systemic banks who were bailed out, and the reforms that were put in place mean we won’t do that again,” Yellen told CBS. “Facing the Nation”. “But we are concerned about depositors and are focused on trying to meet their needs.”

SVB’s stunning internal meltdown began late Wednesday, when it stunned investors with news that it needed to raise $2.25 billion to prop up its balance sheet. Reassurances from SVB’s CEO weren’t enough to stop the bank’s flow, and depositors withdrew more than $42 billion before. end of Thursdaypaving the way for the second largest banking failure in US history.

Federal Deposit Insurance Corporation (FDIC) He said Friday It will cover up to $250,000 per depositor and may be able to start paying those depositors as early as Monday. But the vast majority of SVB’s clients were companies that kept much larger amounts of money uninsured in the bank, prompting widespread concerns about how people would be able to recover the rest of their money.

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Yellen said regulators are considering a wide range of options for SVB, including acquisitions.

“This is really a decision for the FDIC, as it decides what is the best course of action to resolve this company,” Yellen said.

Finding a buyer for SVB is the “best outcome,” former FDIC president Sheila Beer said Sunday.

“The problem is, this was a liquidity failure, it was a bank scramble, so they didn’t have time to get ready to market the bank,” Beer told NBC’s “Meet the Press.” “They have to do it now and play catch-up.”

The ramifications of SVB’s collapse could be far-reaching. Start-ups may be unable to pay employees in the coming days, venture investors may struggle to raise funds, and an already-struggling sector may face deeper distress.

Beer said the FDIC could help companies with payroll in the event of a systemic risk exception, which would be an “extraordinary measure.” She said she thought it would be “difficult to say this is systemic in any way”.

Senator Mark Warner D-Va said. said Sunday that the best outcome would be to find a buyer for SVB before markets open in Asia. Warner said he feels more optimistic that the FDIC will find a solution than he was on Saturday afternoon.

“Bank shareholders are going to lose money, let’s be clear about that. But depositors can be taken care of,” he said on ABC’s “This Week.”

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