• U.S. Treasury Secretary Janet Yellen has ruled out a government bailout of the collapsed Silicon Valley Bank (SVB).
• She explained that the reforms put in place after the 2008 financial crisis were aimed at preventing the need for government bailouts.
• Yellen acknowledged that many startup firms have deposits and venture capital firms have deposits at this bank that have been affected by its failure, but insisted „the American banking system is really safe and well-capitalized.“
U.S. Treasury Secretary Rules Out Government Bailout of Silicon Valley Bank
U.S. Treasury Secretary Janet Yellen has ruled out a government bailout of the collapsed Silicon Valley Bank (SVB), which was shut down by regulators on Friday. Yellen explained that the reforms put in place after the 2008 financial crisis were aimed at preventing the need for government bailouts.
Government Not Considering a Bailout for SVB, Says Yellen
In an interview on CBS News, aired Sunday, U.S Treasury Secretary Janet Yellen stated that the government is not considering a bailout for SVB. She noted that while it was concerning when a large bank like SVB failed, she had worked with banking regulators to design appropriate policies to address it and mentioned how the reforms implemented after 2008 had proven their resilience during Covid-19 pandemic so Americans can have confidence in their banking system’s safety and soundness.. When asked if she had “ruled out” a government bailout of Silicon Valley Bank, she said no such action would be taken due to these regulations in place and asserted that America’s economy relies on a safe and sound banking system to provide credit needs of households and businesses.
Impact on Depositors
Yellen acknowledged that many startup firms have deposits and venture capital firms have deposits at this bank which were impacted by its collapse but assured them of her department’s effort to resolve this situation as they are aware of it. She also emphasized on how well-capitalized America’s banking system is so citizens can trust it even during tough times like these.
Reforms After Financial Crisis
Yellen further explained how unique controls were put in place after 2008 financial crisis to enhance capital and liquidity supervision which were tested during early days of Covid-19 pandemic but held up resiliently thus proving their efficacy as seen from American public’s continued faith in their banking system today despite SVB’s failure..
To conclude, U.S Treasury Secretary Janet Yellen refused any possibility of government bailing out Silicon Valley Bank (SVB) because special regulations had been put in place since 2008 financial crisis to protect citizen’s trust in banks without depending on federal aid whenever failed banks arise.. Despite being aware about impact of SVB’s shutdown upon depositors, she reassured them by emphasizing upon America’s well-capitalized banking system as trustworthy even during trying times like these..