Yellen Says Feds Will NOT Bail Out Silicon Valley Bank• March 12, 2023 1:54 pm • Comments
What happens next to Silicon Valley Bank could have some major impact on the crypto market as a whole.
U.S. Treasury Secretary Janet Yellen on Sunday morning announced the Federal government would not bail out Silicon Valley Bank but instead is working to help depositors impacted by the bank’s collapse.
Yellen would go on to say “The American banking system is really safe and well-capitalized.”
Watch her here:
BREAKING: Janet Yellen Says No Bail Out for SVB But Has Concerns About Contagion to Other Banks
“We’re not going to do that [bail out] again…let me just say that we want to make sure that the troubles that exist at one bank don’t create contagion to others” pic.twitter.com/6aZUlBu5KG
— Chief Nerd (@TheChiefNerd) March 12, 2023
Yellen hopes to avoid a bank run contagion. Masks won’t stop this spread either. pic.twitter.com/8Fq6abZbHA
— TexasLindsay™ (@TexasLindsay_) March 12, 2023
Here’s what Coin Desk reported:
U.S. Treasury Secretary Janet Yellen said Sunday that while the federal government would not bail out Silicon Valley Bank (SVB), it’s working to help affected depositors. “The reforms that have been put in place means that we’re not going to do [a bailout] again,” said Yellen in an interview with CBS News’ “Face the Nation.” She did note that federal government officials were “concerned” for depositors and are “focused on trying to meet their needs,” however. Yellen also sought to calm fears that the bank’s collapse could lead to a domino effect. “The American banking system is really safe and well-capitalized,” she said.
Roughly 85% of SVB depositors held money in accounts that were not FDIC-insured, meaning those funds could be irretrievable. The FDIC insures deposits up to $250,000 for each ownership category at FDIC-insured institutions, of which SVB was a member.
SVB, a 40-year-old bank, collapsed earlier this week following a $42 billion bank run. The withdrawal rush occurred shortly after SVB Financial Group announced on Wednesday its intentions to sell $2.24 billion in new shares in an attempt to compensate for having sold $21 billion of its portfolio’s securities at a $1.8 billion loss. The news spooked high-profile venture capitalists, which prompted them to order their portfolio businesses to pull their money out of the bank, kickstarting a bank run. On March 10, just two days after the bank run began, the Federal Deposit Insurance Corporation (FDIC) seized SVB.
NEW: U.S. Treasury Secretary Janet Yellen says the United States will not bailout Silicon Valley Bank.
SVB should change their name to Ukraine Valley Bank.
— Collin Rugg (@CollinRugg) March 12, 2023
CNBC got the scoop too:
After regulators shuttered Silicon Valley Bank and seized its deposits Friday, U.S. Treasury Secretary Janet Yellen said Sunday that she has been working “to address the situation in a timely way,” but that a major government bailout is not on the table.
“Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out, and the reforms that have been put in place means that we’re not going to do that again,” Yellen told CBS’ “Face the Nation.” “But we are concerned about depositors and are focused on trying to meet their needs.”
SVB’s spectacular implosion began late Wednesday, when it surprised investors with news that it needed to raise $2.25 billion to shore up its balance sheet. Reassurances from SVB’s CEO were not enough to stop the bank run, and depositors withdrew more than $42 billion by the end of the day Thursday, setting the stage for the second-largest bank failure in U.S. history.
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