US Treasury Secretary Rules Out Government Bailout of Silicon Valley Bank – Featured Bitcoin News
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
U.S. Treasury Secretary Janet Yellen stated in an interview on CBS News, aired Sunday, that the government is not considering a bailout for the collapsed Silicon Valley Bank (SVB). The bank was shut down by regulators on Friday and put into receivership by the Federal Deposit Insurance Corporation (FDIC).
Yellen was asked whether the U.S. government needs to “intervene and take emergency measures because of SVB failure.” The treasury secretary replied: “America’s economy relies on a safe and sound banking system that can provide for the credit needs of our households and businesses. So whenever a bank, especially one like Silicon Valley Bank with billions of dollars in deposits fails, it’s clearly a concern.” She continued:
I’ve been working all weekend with our banking regulators to design appropriate policies to address this situation.
Yellen explained that in the aftermath of the 2008 financial crisis, “unique controls” were put in place to enhance capital and liquidity supervision, and they were tested during the early days of the Covid-19 pandemic. The system “proved its resilience so Americans can have confidence in the safety and soundness of our banking system,” she claimed.
Responding to a question about whether she has “ruled out” a government bailout of Silicon Valley Bank, the treasury secretary detailed:
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 means that we’re not going to do that again.
While noting that she cannot provide further details on the SVB situation at this time, Yellen insisted: “The American banking system is really safe and well-capitalized. It’s resilient.”
Yellen acknowledged that the government is “well aware that many startup firms have deposits and venture capital firms have deposits at this bank that have been affected by its failure,” emphasizing that “this is something we’re working to try to resolve.”
Following the collapse of Silicon Valley Bank, billionaire Bill Ackman, CEO and portfolio manager of Pershing Square Capital Management, warned of “vast and profound” consequences of the U.S. government allowing the bank to fail without protecting all depositors. He also warned of possible bank runs starting on Monday. Meanwhile, Rich Dad Poor Dad author Robert Kiyosaki has cautioned that another bank is set to crash.
What do you think about the statements by U.S. Treasury Secretary Janet Yellen? And, do you think the government should bail out SVB? Let us know in the comments section below.
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