Let me make it clear that during the financial crisis there were investors and owners in the big systemic banks who were bailed out, but due to the reforms that have been introduced, we will not do that again
– said Yellen, who added that one of the first priorities is to be able to satisfy the needs of depositors.
The troubled Silicon Valley Bank was closed by the American regulatory authorities, after which the American deposit insurance company, the FDIC, took over control of the bank’s deposits.
Yellen sought to reassure Americans on Sunday that the banking system is safe, better capitalized and more resilient than it was during the 2008 global financial crisis, given the new measures and capital requirements introduced after 2008 and the tests conducted in the early days of the pandemic.
Americans can trust the safety and soundness of our banking system
Yellen said, adding that regulators wanted to ensure that the crisis did not spread to other banks.
We want to ensure that problems at one bank do not spread to other healthy banks.
Asked if the US government would consider another bank buying SVB, Yellen said:
This is the decision of the FDIC as it determines the best course of action to liquidate the company. I’m sure they are considering a wide range of available options. These may include acquisitions.
After Friday’s intervention, the FDIC announced that insured depositors would be able to access their deposits by Monday morning at the latest. FDIC insurance is limited to a maximum of $250,000 per depositor per bank. SVB branches will also reopen at this time, under the control of the regulatory authority. Reuters, on the other hand, reminds that deposits above this amount – which accounted for 85 percent of SVB invoices – are in danger.
The collapse of SVB raised concerns about the ability of small businesses that bank with the company to pay their employees. Yellen did not give a clear answer to the question of whether depositors should be paid in full.
We are very aware of the problems of depositors. Many of them are small businesses that employ people across the country. Of course, this is a major concern.
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