by Lananh Nguyen, Pete Schroeder and Sarah N. Lynch
WASHINGTON (Reuters) – Treasury Secretary Janet Yellen said on Sunday she was working closely with banking regulators following the collapse of Silicon Valley Bank, which she rules out a bailout.
SVB Financial Group this week became the largest bank to fail since the 2008 financial crisis. Its sharp fall, which shook financial markets, raised fears of contagion to other US regional banks.
The Federal Deposit Insurance Corporation (FDIC), the organization responsible for guaranteeing deposits in the United States, has been appointed receiver and was trying, according to several sources, to find another bank ready to merge with Silicon Valley Bank.
“We want to make sure that one bank’s problems don’t spread to other banks that are healthy,” Jenet Yellen told CBS News.
“I want to make it clear that during the financial crisis, investors and owners of large systemic banks were rescued…and the reforms put in place mean we are not going to do it again,” she added.
The former Federal Reserve chair stressed that the US banking system was safe and well capitalized, given the controls and capital requirements put in place after the 2008 crisis.
Asked about a possible full refund of depositors, Janet Yellen did not wish to comment on the details. “We are well aware of the problems depositors will encounter. Many of them are small businesses with employees across the country. This is of course a major concern,” she said.
Several sources familiar with the matter indicated that the American authorities were preparing “significant action” to consolidate the deposits of the Silicon Valley Bank and stem any wider fallout, in particular to the venture capital sector.
(Sarah N. Lynch, Rami Ayyub, Andrea Shalal, Lananh Nguyen, Pete Schroeder, French version Laetitia Volga, edited by)
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