No bailout for failed Silicon Valley Bank, says Treasury Secretary Janet Yellen

The feds won’t bail out Silicon Valley Bank, but they will try to help worried customers who have money deposited in the failed institution, Treasury Secretary Janet Yellen said Sunday.

Deposits up to $250,000 are insured by the Federal Deposit Insurance Corporation, and many start-up tech companies had more than that in their accounts at the California bank.

The failure of Silicon Valley Bank, which does much of its business with tech startups and venture capital, is the second biggest bank failure in the nation’s history, following the 2008 collapse of Washington Mutual.

Yellen said on CBS’ “Face the Nation” that the case of Silicon Valley Bank was far different than the financial crisis when Washington Mutual failed and the government bailed out banks to protect the financial industry.

“We’re not going to do that again,” Yellen said. “But we are concerned about depositors and we’re focused on trying to meet their needs.

“The American banking system is really safe and well capitalized,” she added. “It’s resilient.”

The treasury secretary pointed to rising interest rates, being used to fight inflation, as the problem for Silicon Valley because many of its assets lost market value as rates rose.

When Silicon Valley tech customers needing cash for financing started tapping into their accounts, the bank had to sell bonds at a loss to cover the withdrawals. Regulators seized its assets on Friday.

“The problems with the tech sector aren’t at the heart of the problems at this bank,” she said.

Yellen noted she is working closely with banking regulators who are looking at “a wide range of available options,” including the acquisition of Silicon Valley by another financial institution.

House Speaker Kevin McCarthy told Fox News Channel’s “Sunday Morning Futures” that he hoped the bank would be purchased.

“I think that would be the best outcome to move forward and cool the markets and let people understand that we can move forward in the right manner,” the California Republican said.

With News Wire Services