No Bailout For Silicon Valley Bank, US Treasury Secretary Now Promises Assistance
- Silicon Valley Bank (SVB) will not be bailed out by the US government, following its sudden collapse this week.
- Instead, the government will prioritize aiding depositors, and the Federal Deposit Insurance Corporate (FDIC) has taken control of the bank.
According to Financial Times, US Treasury Secretary Janet Yellen has confirmed that the government will not bail out Silicon Valley Bank, following its sudden collapse this week. However, Yellen has reassured depositors that the government will aid them amidst the closure. The Federal Deposit Insurance Corporate (FDIC) has taken control of the bank, and policies are being developed to assist US customers potentially impacted by the closure.
California regulators announced the closure of SVB Financial after it failed to raise capital and attempted to sell. This is the largest banking failure since the 2008 financial crisis, prompting the finance sector to seek answers and a way forward.
In an interview with CBS, Yellen stated that investors and owners of large banks were bailed out during the financial crisis, but reforms have been implemented to prevent this from happening again. Yellen emphasized that the government is working alongside regulators to explore the best avenues forward.
“But we are concerned about depositors, and we’re focused on trying to meet their needs,” Yellen added. The government’s priority is to protect depositors, as opposed to bailing out the bank. The government’s role will be to aid creditors amidst the closure, and it will not bail out Silicon Valley Bank.
As policies are being developed to assist customers potentially impacted by the closure, the FDIC has taken control of the bank. No specific government action has been enacted as of yet.
The collapse of Silicon Valley Bank underscores the importance of sound financial management, particularly in the rapidly-evolving crypto industry. Investors and stakeholders must be vigilant in ensuring that banks and financial institutions adhere to best practices and maintain sufficient capitalization to withstand market volatility.
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