Treasury Secretary Janet Yellen on Sunday said there were no plans for the federal government to bail out Silicon Valley Bank, which was shut down by the Federal Deposit Insurance Corporation on Friday.
In an interview on CBS’ “Face the Nation,” Yellen did not give many details about what the government might do about the largest bank failure since the Great Recession of 2008. However, she said the economic situation was much different 15 years ago, when the government bailed out banks to protect the industry, according to The Associated Press.
“Well, 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,” Yellen told “Face the Nation.” “And the reforms that have been put in place means that we’re not going to do that again. But we are concerned about depositors and are focused on trying to meet their needs.”
Silicon Valley Bank is the nation’s 16th-largest bank, according to the AP. Silicon Valley Bank is the second-biggest shutdown in U.S. history, and its closure placed nearly $175 billion in customer deposits under the control of the FDIC, according to The New York Times. The bank lent money to some of the biggest names in the technology industry, according to the newspaper.
The California Department of Financial Protection and Innovation shut down the bank on Friday, according to The New York Times. The FDIC created a new bank, the National Bank of Santa Clara, to hold the deposits and other assets of the failed one.
In a news release, the agency said that the new bank would be operating by Monday. Checks from the old bank will continue to clear, the FDIC said.
Yellen said that there would be no domino effect in the wake of Silicon Valley’s collapse, according to the AP.
“Well, let me say America’s economy relies on a safe and sound banking system that can provide for the credit needs of our households and businesses,” Yellen said on “Face the Nation.” “So whenever a bank, especially one, like Silicon Valley Bank with billions of dollars in deposits fails, it’s clearly a concern.
“We’ve been hearing from those depositors and other concerned people this weekend. So let me say that I’ve been working all weekend with our banking regulators to design appropriate policies to address this situation,” Yellen added. “I can’t really provide further details at this time. But what I do want to do is emphasize that the American banking system is really safe and well-capitalized. It’s resilient.”
