Transcript: Treasury Secretary Janet Yellen on “Face the Nation,” March 12, 2023

The following is a transcript of an interview with Treasury Secretary Janet Yellen that aired on “Face the Nation” on Sunday, March 12, 2023.

MARGARET BRENNAN: Mark Strassmann, thank you. We now turn to Secretary of the Treasury Janet Yellen. Madam Secretary. Good morning.

TREASURY SECRETARY GELLEN: Good morning, Margaret.

MARGARET BRENNAN: I want to start right away, because the markets will be opening up for trading soon. Should the government intervene and take emergency measures because of the failure of the SVB?

TREASURY SECRETARY JANET YELLEN: Well, let me say that the US economy depends on a safe and sound banking system that can meet the credit needs of our households and businesses. So when a bank, especially a bank like Silicon Valley Bank goes out of business with billions of dollars in deposits, that’s clearly a concern. From a depositors standpoint, many of which may be small businesses, they depend on access to their money to pay the bills they have, and they employ tens of thousands of people across the country. We heard from those savers and other concerned people this weekend. So let me say I spent all weekend working with our banking regulators to design appropriate policies to address this situation. I can’t really give more details at the moment. But what I do want to emphasize is that the US banking system is really safe and well capitalized, resilient. In the aftermath of the 2008 financial crisis. New controls have been put in place for better capital and liquidity supervision, and tested during the early days of the pandemic, proving its resilience so that Americans can have confidence in the safety and soundness of our banking system.

MARGARET BRENNAN: Can you say if these problems were unique to Silicon Valley Bank? Or can you say whether there will be more regional bank failures?

SECRETARY YELLEN: Well, look, let me just say we want to make sure that the problems that exist in one bank don’t contagion others that are healthy. And the goal is always oversight and regulation to make sure contamination can’t happen.

MARGARET BRENNAN I know you don’t want to go into details about that. But of course there are a lot of questions this morning. Your counterpart in the United Kingdom has said that the government there has ruled out a bailout for the British branch of Silicon Valley Bank. Have you also ruled out such government intervention?

SECRETARY GELLEN: Let me be clear that investors and owners of major systemic banks were bailed out during the financial crisis, and we are certainly not looking. And the reforms that have been implemented ensure that we will not do that again. But we worry about savers and try to meet their needs.

MARGARET BRENNAN: For those savers, about 85% of the SVB accounts were uninsured. And, as you mentioned, a lot of different tech companies relied on them. Do you think depositors should be repaid in full? Shall they?

SECRETARY GELLEN: Listen, I’m not going to comment on the details of the situation at this point. I just want to say that we are very aware of the issues depositors are going to have, many of them are small businesses that employ people across the country. And this is of course a major concern, and we are working with regulators to address those concerns.

MARGARET BRENNAN: Do you expect a deal or anything that can reassure markets before Asia opens tonight and US markets open tomorrow?

SECRETARY GELLEN: We are certainly working to address the situation in a timely manner.

MARGARET BRENNAN: Now, I know you know this region of the country so well because you served on the San Francisco Fed years ago. The technology sector is already suffering from layoffs, already under pressure, and this is really the hub of American innovation. How serious will the consequences be for that innovation?

SECRETARY GELLEN: So I really can’t comment on what the impact will be. I think it depends on how this situation is resolved. And that’s something we’re working on. But you are well aware that many startup companies have deposits and venture capital firms have deposits with this bank that has been affected by the bankruptcy. So this is something we’re working on to fix.

MARGARET BRENNAN: You know, if you look at this in general, this bank had a huge exposure to this one specific industry. How did government regulators miss that risk?


Well, I know, I would, I would say that although the technology sector has suffered a recession, and there have been some significant layoffs. This bank’s problems, from the news coverage of its situation, suggest that because we are in a higher interest rate environment, the assets it holds, many of which are treasury assets or government-backed mortgage-backed securities, are losing market value. , and the problems of the technology sector are not at the heart of this bank’s problems.


Was it just mismanagement? I know there is a lot of protest and criticism about what happened in the last few days. The CEO of that bank reportedly sold about $3 million worth of stock 24 hours before the bank went bankrupt. For people back home, can you — how do you explain if this was a problem, a mismanagement? Go ahead.



Margaret, the FDIC- the FDIC has placed this bank in receivership and will be working to resolve it this weekend. And in the meantime, I really can’t comment on details about this bank’s situation.


You mentioned the interest rate environment we are in. The Federal Reserve has aggressively raised interest rates to try and control them. Do you see that pose a further risk to the financial sector? I mean, is this for people at home, do they see this as a one-off? Or should they worry that others will also feel the effects?


We should be – Americans should be confident that the banking system is safe and sound, that it can meet the credit needs of households and businesses, and that savers don’t have to worry about losing access to their money. And those are goals that we’re all embracing as financial regulators in this — in this economy, and we’ll try to make sure they’re realized.


Do you foresee what is happening now that will make it more difficult for Fed Chairman Powell to continue with the kind of rate hikes he has indicated he intends? I mean he just said this week it’s still a bumpy road with inflation. Is his toolbox shrinking because of the risks we are now seeing?


Well, Margaret, the Federal Reserve is independent and tasked with making assessments of the right course of action to address financial risk, and also to meet their inflation and employment targets. And I’m not going to comment on what the right response is for them. They will evaluate that in the coming days and weeks.


Because for many looking at the level of risk out there, they’re asking the question of whether the Fed will be able to continue what it’s doing. They’re looking at this approaching debt ceiling deadline, and the political battle over it, that’s on the calendar. And this inflation battle and it looks like there’s mounting risks to the direction of the economy. How do you look at the big picture now?


Look, the big picture, I think we have an extremely strong economy. We just got the news on Friday that more than 300,000 new jobs have been created this month and that the labor force participation rate has increased. So, despite all that job creation, we saw some relief from pressure on the labor market in the form of slightly higher unemployment. Inflation is falling, the economy is in good shape. And we must ensure that our financial system remains strong and able to support a strong economy. But I think this economy is in good shape.

MARGARET BRENNAN: Would you be open to a foreign bank coming in like a white knight to help stabilize the situation with Silicon Valley Bank?

SECRETARY YELLEN: So this is really a decision for the FDIC as it decides the best way to resolve this business. And I’m sure they’re considering a wide variety of options available. That includes acquisitions.


OK, we’ll pay attention to that. And, Madam Secretary, I just wanted to ask you about the $7 trillion dollar budget that the President just proposed? Is there any part of this proposal that you should keep?


Look, you know, this is a budget that invests in our economy in a way that will enhance its growth. It invests in education, in childcare, in research and development. It alleviates the costs faced by households for prescription drug health insurance. It supports the Medicare Trust Fund for decades to come. And it pays for these investments and reduces budget deficits by nearly $3 trillion over the next 10 years by asking high-income, very high-income individuals and businesses to pay their fair share. So yes, I think this budget has many important proposals that are critical to the health of the US economy and will strengthen its fiscal position for a long time to come.

MARGARET BRENNAN: Madam Secretary, I’ve been told you’re short on time, and I must leave it at that. Thank you for your work and your time this morning.

SECRETARY GELLEN: Thank you very much, Margaret.






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