Recently we are witnessing the ongoing collapse of Silicon Valley Bank (SVB), one of the biggest in history, second only to the demise of Washington Mutual Bank during the Great Financial Crisis in 2008.
During the uncertainties surrounding the SVBs bank run, U.S Treasury Secretary Janet Yellen came forward saying that the government would not bail out SVB, in an interview with CBS News.
When the interviewer asked Yellen about any possible government intervention, the Treasury Secretary stated: “Well let me be clear that 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 mean that we’re not going to do that again. But we are concerned about depositors and are focused on trying to meet their needs,” Yellen added.
Yellen stated that numerous startup firms and venture capital firms have deposits at SVB that have been harmed by the bank’s failure, and the government is working to settle the problem.
Meanwhile, Yellen approved measures to allow the Federal Deposit Insurance Corporation (FDIC) to finish its resolutions of Silicon Valley Bank and fallen crypto-friendly Signature Bank in a way that fully protects all depositors, both insured and uninsured, after receiving a recommendation from the boards of the FDIC and the Federal Reserve.
The FDIC declared that it will provide depositors with up to $250,000 in coverage, and it might be able to start making payments starting today.
Yellen noted the FDIC is considering a wide range of available options, including acquisitions to deal with SVB failure.
The abrupt demise of Silicon Valley Bank shocked the startup community as numerous businesses scurry to find methods to survive after the bank was taken over by authorities.
Also Read: Janet Yellen Says Stablecoins Pose no Systematic Risk
