Treasury Secretary Janet Yellen said Sunday that the federal government would not bail out Silicon Valley Bank, but is working to help depositors who are concerned about their money.
The Federal Deposit Insurance Corporation insures deposits up to $250,000, but many of the companies and wealthy people who used— known for its relationships with technology startups and venture capital — had more than that amount in their account. There are fears that some workers across the country won’t receive their paychecks.
Yellen, in her Sunday morning interview with CBS’ "Face the Nation," provided few details on the government’s next steps. But she emphasized thatfrom the financial crisis almost 15 years ago, which led to bank bailouts to protect the industry. Silicon Valley Bank began its slide into insolvency when its customers, largely technology companies that needed cash as they struggled to get financing, started withdrawing their deposits. The bank had to sell bonds at a loss to cover the withdrawals, leading to the largest failure of a U.S. financial institution since the height of the financial crisis.to combat inflation, as the core problem for Silicon Valley Bank.
Sheila Bair, who was the FDIC chair during the 2008 financial crisis, recalled that with almost all the bank failures during that time, "we sold a failed bank to a healthy bank. And usually, the healthy acquirer would also cover the uninsured because they wanted the franchise value of those large depositors so optimally, that’s the best outcome.
House Speaker Kevin McCarthy, R-Calif., told Fox News Channel’s "Sunday Morning Futures" that he hoped the administration would announce the next steps as soon as Sunday.
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