As it did with other financial institutions during the 2008 financial crisis, the U.S. government says it won’t bail out Silicon Valley Bank. However, Treasury Secretary Janet Yellen noted that regulators are working to ensure that people and businesses with money in the failed bank would be made whole.
“The changes that have been put in place imply that we’re not going to do it again,” Yellen said when questioned about a bailout during a Sunday appearance on CBS’s Meet the Nation.
Yet she continued, “We are worried about depositors and are concentrated on trying to meet their demands.
Days after federal regulators took control of the institution in response to a “run” on the bank by depositors, Silicon Valley Bank, or SVB, and its clients’ futures were in limbo over the weekend.
Clients had been requesting money withdrawals in droves, and earlier this week SVB said that it had to sell bonds at a significant loss to fund those requests. The fear over SVB’s financial status exacerbated as a result of that news, and withdrawal attempts increased until regulators intervened.
One of the worst failures of an American bank since the global financial crisis of 2008 was the collapse of SVB.
The current financial issues affecting the IT industry put a pressure on the bank and caused its stock price to plummet. SVB had carved out a niche in the banking business by lending to software firms.
Yellen stated that she believes the entire American banking system is “very safe,” “well-capitalized,” and “resilient” despite the failure of SVB.
All insured depositors will have complete access to their protected accounts by Monday morning, the Federal Deposit Insurance Corporation announced on Friday. The organisation added that it will send depositors who had uninsured funds a “receivership certificate for the remaining amount of their uninsured funds” as well as a “advance dividend” in the upcoming week.
The FDIC is an independent government organisation that receives funding from member banks and savings associations and does not use taxpayer funds to support deposit insurance.
Authorities in the UK were also developing a strategy to guarantee payment to SVB’s UK branch customers.
The bank’s failure has put IT companies and other SVB clients in a bind and even generated problems for people who were not directly affected by the bank, including Etsy merchants who were informed they would experience payment delays because the online marketplace uses SVB to handle some payments.
