United States Treasury Secretary Janet Yellen told CBS News on Sunday that a major bailout of the Silicon Valley Bank after its collapse on Friday is not something the US government is considering doing. In the interview, she discussed the possibility of how the regulators would respond to protect depositors and said that she is working on designing “appropriate policies to address the situation.” “Let me be clear that during the financial crisis, there were investors and owners of systemically large banks who were bailed out…and the reforms that have been put in place mean we’re not going to do that again,” she said.
Fed, FDIC to create backstop for uninsured Silicon Valley Bank deposits
The United States Federal Reserve and the Federal Deposit Insurance Corp. (FDIC) are considering a backstop for uninsured deposits at Silicon Valley Bank, CNBC reported, citing a source. The move is aimed at restoring confidence in the banking system and reassuring depositors that their funds are safe. Under the Federal Deposit Insurance Act, the FDIC has the authority to provide insurance coverage for uninsured deposits in exceptional cases. This can help protect them from losses. The news comes after it was reported that the regulators have taken steps to auction the bank and mitigate the ripple effects from the institution’s collapse. United States regulators are auctioning Silicon Valley Bank (SVB) in order to find a buyer quickly after the institution collapsed on Friday, the Wall Street Journal reported citing people familiar with the matter. The Federal Deposit Insurance Corp. (FDIC) has taken over SVB due to its inability to raise sufficient capital to support its operations. To repay depositors, the regulators are looking to sell the bank to interested buyers through an auction process. It is not uncommon for regulators to use auctions as it allows them to maximize the value of the assets.