Treasury Secretary Janet Yellen appeared to rule out a federal bailout for Silicon Valley Bank while underscoring that government officials have been scrambling to assist depositors.
Silicon Valley Bank collapsed Friday following a run of the bank, prompting a takeover by federal regulators. Given the size of SVB, many have compared it to faltering banks during the financial crisis of 2008, but Yellen contended the circumstances are different.
SILICON VALLEY BANK COLLAPSE: CEO CASHED OUT MILLIONS WHILE EMPLOYEES GOT BONUSES
"Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out," Yellen told CBS. "The reforms that have been put in place mean we are not going to do that again."
Out of fear that the 2008 financial crisis could devolve into a full-blown depression, Congress authorized a roughly $700 billion bailout package known as the Troubled Asset Relief Program. Without providing many specifics, Yellen stressed that the Treasury Department is keen on helping depositors.
Under the Federal Deposit Insurance Corporation policy, bank deposits are insured up to $250,000. Since SVB was a unique bank that serviced tech start-ups, many of the bank's deposits were over $250,000. Since SVB's collapse, reports revealed that its CEO Greg Becker cashed out stock options in the weeks leading up to its collapse.
"We are concerned about depositors and are focused on trying to meet their needs," Yellen emphasized. "I’ve been working all weekend with our banking regulators to design appropriate policies to address this situation."
Yellen also shrugged off concerns that the SVB collapse could be indicative of system problems in the United States's banking system. SVB was the 16th-largest bank in the country and one of the biggest banking failures since Washington Mutual in 2008.
“The American banking system is really safe and well-capitalized,” she added. “It’s resilient.”
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The SVB collapse appears to have been fueled in part by inflation, higher interest rates from the Federal Reserve, and a downturn in the tech sector broadly. On Wednesday, SVB announced it sold a slew of securities at a loss, which sparked panic from venture capital firms.
Depositors protected by the FDIC are expected to gain access to insured deposits by Monday.