US Treasury Secretary Janet Yellen on Sunday said the government wanted to avoid financial “contagion” from the implosion of the Silicon Valley Bank but ruled out a bailout of the institution.
“We want to make sure that the troubles that exist at one bank don’t create contagion to others that are sound,” Yellen said during an interview with CBS.
On Friday, US regulators pulled the plug on SVB — a key lender to US startups since the 1980s — after a run on deposits made it no longer tenable for the medium-sized bank to stay afloat on its own.
Following SVB’s disclosure on Wednesday, investors punished the banking sector in total on Thursday, but by Friday, shares in some larger banks posted gains.
However, regional lenders remained under pressure, including First Republic Bank, which slumped nearly 30 percent in two sessions on Thursday and Friday, and Signature Bank, a cryptocurrency-exposed lender, which has lost a third of its value since Wednesday evening.
Yellen said on Sunday that the government was working with the US deposit guarantee agency, the FDIC, on a “resolution” of the situation at SVB, where approximately 96 percent of deposits are not covered by the FDIC’s reimbursement guarantee.
“I’m sure they (the FDIC) are considering a wide range of available options that include acquisitions,” she said.
Yellen said reforms made after the 2008 financial crisis meant the government was not considering a bailout for SVB.
“During the financial crisis, there were investors and owners of systemic large banks that were bailed out… and the reforms that have been put in place means that we’re not going to do that again,” she said.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
Featured Video Of The Day
India Is Hopeful That Naatu Naatu Will Bring Home The Oscars
This post is taken from RSS feed of the website if you want me to remove please do contect me it will be removed in 48 hours.