US Treasury Secretary Janet Yellen is reportedly working with regulators to deal with the collapse of Silicon Valley Bank and protect investors, but is not considering a major bailout.
Yellen made the comments during an interview with CBS News on March 12, claiming that regulators are “designing appropriate policies to address the situation” at the bank. She stated:
“During the financial crisis, there were investors and owners of major systemic banks that were bailed out, and we are certainly not looking. And the reforms that have been made mean that we are not going to do that again. But we are concerned about depositors and are trying to meet their needs.”
Regarding the fact that most accounts at SVB are unsecured, Yellen noted that regulators are “very aware of the issues that depositors will 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 try and address these concerns.”
Yellen also spoke of the possibility of other regional US banks being hit by the Silicon Valley collapse:
“Let me just say we want to make sure that the problems that exist in one bank don’t contagion to others that are healthy. And the goal is always oversight and regulation to make sure that contagion can’t be prevented.”
Federal Reserve data shows that small banks in the US had $6.8 trillion in assets and $680 billion in equity as of February 2023. by Cointelegraph.
See also: The bankruptcy of the Silicon Valley Bank could lead to a run on US regional banks
Silicon Valley Bank is one of the 20 largest banks in the United States and provides banking services to many crypto-friendly venture firms. According to a Castle Hill report, Web3 venture capitalists’ assets total more than $6 billion at the bank, including $2.85 billion from Andreessen Horowitz, $1.72 billion from Paradigm and $560 million from Pantera Capital.
According to Yellen, the Federal Deposit Insurance Corporation (FDIC) is considering “a wide variety of available options,” including acquisitions of foreign banks. “We are certainly working to address the situation in a timely manner,” she noted.
Silicon Valley was shut down by California’s financial watchdog on March 10 after announcing a significant asset and stock sale to raise $2.25 billion in capital to support operations. The FDIC was appointed as a trustee to protect insured deposits. However, the FDIC only insures up to $250,000 per depositor, per institution, and per category of property.
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