U.S. Treasury Secretary Janet Yellen said Sunday that the government wants to avoid financial “contagion” in the wake of Silicon Valley Bank’s failure, but ruled out a bailout of the bank.
“We want to make sure that problems that exist in one bank don’t create contagion to others that are sound,” Yellen said during an interview with CBS.
U.S. authorities closed the bank on Friday to protect its customers’ deposits.
The banking sector as a whole plunged on Wall Street on Thursday, but on Friday, shares of some larger banks rebounded.
However, regional lenders remained under pressure, including First Republic Bank, which plunged nearly 30% in two sessions on Thursday and Friday, and cryptocurrency-exposed Signature Bank, which has lost a third of its value since Wednesday night.
You don’t want a general panic
Yellen said Sunday that the government is working with the U.S. guaranty agency, the FDIC, on a “resolution” of the situation in SVBThe SVB’s deposits are not guaranteed for repayment, since approximately 96% of the financial institution’s deposits are not guaranteed for repayment.
“I’m sure they (the FDIC) are considering a wide range of available options including acquisitions,” she said.
Yellen asserted that reforms made in the wake of the 2008 financial crisis closed the door on a bailout of the Silicon Valley Bank.
“During the financial crisis, there were investors and owners of big banks that were bailed out … and the reforms that have been put in place mean that we’re not going to do that again,” he said. (AFP)
We recommend METADATARPP’s technology podcast. News, analysis, reviews, recommendations and everything you need to know about the technological world.