Treasury Secretary Janet Yellen stressed that the US government will not bail out Silicon Valley Bank, as it did during the 2008 financial crisis.
Speaking on CBS’s “Face The Nation” on March 12, Treasury Secretary Janet Yellen ruled out a government bailout. Silicon Valley Bank. The female minister explained:
“During the 2008 financial crisis, there were big investors and bankers getting bailed out. However, that doesn’t mean we’ll do it again. We are concerned about depositors and are focused on meeting their needs.”
Treasury Secretary Janet Yellen rules out a bailout for Silicon Valley Bank. “We’re not going to do that again,” she said. https://t.co/cdWPW3xaP0
— CBS News (@CBSNews) March 12, 2023
In an interview on the same day with NBC, Senator Robert Menendez of the Democratic Party also made it clear that he did not support the government to save SVB.
Yellen and many other officials remain confident that “the US banking system is really safe and able to cope”, having strengthened its resilience thanks to new regulations on controls and capital flows since the end of the war. 2008 crisis and challenges in the early stages of the Covid-19 pandemic.
Yellen told CBS:
“We want to make sure problems that exist in one bank don’t spread to other stable banks.”
As Kyptos reported, facing a capital crisis and sudden massive customer withdrawals, Silicon Valley Bank (SVB) went bankrupt on the morning of March 10 and was taken over by the US agency.
This is the largest bankruptcy by an American bank since the 2008 financial crisis. Founded in 1983, SVB specializes in providing banking services to Silicon Valley technology startups and is a bank. 16th largest trading house in the US with 209 billion USD in assets (as of the end of 2022).
SVB was later transferred to the US Federal Deposit Insurance Corporation (FDIC). This agency will liquidate the bank’s assets to pay the depositors and creditors of SVB.
The US stock market and the crypto industry have had a lot of heart-stopping episodes in the past 48 hours. Many big companies have publicized their exposure to Silicon Valley Bank. In particular, Binance exchange, stablecoin companies Paxos, Tether and Bybit exchange all confirmed that they were not involved from SVB or Silvergate Bank, The “crypto-friendly” bank also “voluntarily liquidated assets” last week. On the other hand, the lending platform that went bankrupt is BlockFi again admitted to being stuck at 227 million USD at the bank. The heaviest loss to date is Circle – the issuer of USDC, with $ 3.3 billion.
According to Bloomberg, the FDIC and the Federal Reserve (Fed) are considering setting up a special fund to reassure users, guaranteeing deposits at troubled banks after SVB’s bankruptcy. FDIC only protects and gives 100% back for deposits of 250,000 USD or less, but higher amounts – accounting for 85% of SVB’s accounts – are in danger of being lost.
In addition, the FDIC has begun racing to auction Silicon Valley Bank to return uninsured deposits to customers. Source of Bloomberg said the final bid will be fixed on the afternoon of March 13 (US time).
Synthetic Kyptos
