Janet Yellen: No Federal Govt Bailout of Silicon Valley Bank; Economy Is in “Good Shape”

In an interview that aired Sunday morning on the CBS News show Face the Nation with host Margaret Brennan, Treasury Secretary Janet Yellen said there would be no federal government bailout of insolvent Silicon Valley Bank which was taken over by California regulators and the FDIC on Friday. With regard to depositors, Yellen said “we are concerned about depositors and are focused on trying to meet their needs.” Yellen put a happy face on the Biden economy, telling Brennan, the “economy is in good shape.”

Video clips and transcript excerpts below:

Transcript excerpts via CBS:

On ruling out a bailout, concern for depositors and a possible deal to save the bank before markets open:

MARGARET BRENNAN: For those depositors, about 85% of SVBs accounts were uninsured. And, as you were saying, a lot of different tech firms relied on them. Do you believe that depositors should be paid back in full? Will they?

SECRETARY YELLEN: Look, I’m not going to comment on the details of the situation at this point. I simply want to say that we’re very aware of the problems that depositors will have, many of them are small businesses that employ people across the country. And of course, this is a significant concern, and working with regulators to try to address these concerns.

MARGARET BRENNAN: Do you expect a deal or something to happen that can reassure the markets before Asia opens tonight, and US markets open tomorrow?

SECRETARY YELLEN: We certainly are working to address the situation in a timely way.

SECRETARY YELLEN: Well let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out, and we’re certainly not looking. And the reforms that have been put in place means that we’re not going to do that again. But we are concerned about depositors and are focused on trying to meet their needs.

On the Biden economy:

SECRETARY YELLEN: Well look, big picture, I think we have an extremely strong economy. We just got news on Friday that this month, over 300,000 new jobs were created, and participation in the labor force ticked up. So, in spite of all that job creation, we saw a slight easing of labor market pressures in the form of a slightly higher unemployment rate. Inflation is coming down, the economy is in good shape. And we need to make sure that our financial system remains strong and capable of supporting a strong economy. But I think this economy is in- is in good shape.

On possible foreign acquisition of SVB:

MARGARET BRENNAN: Would you be open to a foreign bank coming in as a white knight to help stabilize the situation with Silicon Valley Bank?

SECRETARY YELLEN: So this is really a decision for the FDIC, as it decides on what the best course is to resolve this firm. And I’m sure they’re considering a wide range of available options. That would include acquisitions.

Two weeks ago Yellen made the pilgrimage to Ukraine to meet with President Volodymyr Zelenskyy and discuss U.S. aid to the war-torn country defending itself from Russian invasion.

https://twitter.com/KyivPost/status/1630254823680376834

Treasury Department readout on the meeting:

February 27, 2023
KYIV – Today, U.S. Secretary of the Treasury Janet L. Yellen met with President of Ukraine Volodymyr Zelenksyy. Secretary Yellen commended President Zelenskyy for his leadership and resolve in the face of Russia’s illegal and unprovoked war. The Secretary welcomed President Zelenskyy’s ongoing actions to strengthen good governance and address corruption. Secretary Yellen discussed the ongoing U.S. economic support that helps Ukraine continue to be able to provide vital basic services to its people, including the first transfer of $1.25 billion out of $9.9 billion in U.S. budget support to be provided over the first three quarters of 2023. Secretary Yellen also highlighted the efforts of the U.S. and its global coalition to impose severe sanctions on Russia to degrade its war machine and limit the revenue it has to fund its brutal war. The Secretary expressed that the United States will continue to stand with Ukraine for as long as it takes as it defends against Russia’s attacks and begins to rebuild a prosperous and free Ukraine.

SVB tweeted a link on Saturday to the FDIC statement about the takeover of the failed bank released Friday:

FDIC statement:

FDIC Creates a Deposit Insurance National Bank of Santa Clara to Protect Insured Depositors of Silicon Valley Bank, Santa Clara, California

WASHINGTON – Silicon Valley Bank, Santa Clara, California, was closed today by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB). At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank.

All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.

Silicon Valley Bank had 17 branches in California and Massachusetts. The main office and all branches of Silicon Valley Bank will reopen on Monday, March 13, 2023. The DINB will maintain Silicon Valley Bank’s normal business hours. Banking activities will resume no later than Monday, March 13, including on-line banking and other services. Silicon Valley Bank’s official checks will continue to clear. Under the Federal Deposit Insurance Act, the FDIC may create a DINB to ensure that customers have continued access to their insured funds.

As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits. At the time of closing, the amount of deposits in excess of the insurance limits was undetermined. The amount of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers.

Customers with accounts in excess of $250,000 should contact the FDIC toll–free at 1-866-799-0959.

The FDIC as receiver will retain all the assets from Silicon Valley Bank for later disposition. Loan customers should continue to make their payments as usual.

Silicon Valley Bank is the first FDIC–insured institution to fail this year. The last FDIC–insured institution to close was Almena State Bank, Almena, Kansas, on October 23, 2020.

The Wall Street Journal reported Sunday regulators are “racing over the weekend” working on SVB (excerpt):

Bank regulators were racing over the weekend to sort out Friday’s stunningly hasty collapse of Silicon Valley Bank and are facing high stakes as they try to shield the banking system from wider fallout.

A plan that soothes nerves about access to uninsured deposits—most of the bank’s deposits are sizable enough that they don’t carry Federal Deposit Insurance Corp. protection—could tamp down the crisis and limit any impact on the economy as the Federal Reserve focuses on combating inflation by raising interest rates.

But failing to swiftly clarify how SVB’s customers can access funds, make payroll and conduct business risks broader economic consequences and threatens to complicate the Fed’s monetary policy decisions.

The Journal also noted that Fed Chairman Jerome Powell participated in a total depositor bailout of the 1991 failure of the Bank of New England Corp.:

Mr. Powell, who was a senior official in the Treasury Department during the George H.W. Bush administration, spent a weekend in January 1991 with counterparts from the Fed and FDIC addressing the collapse of the Bank of New England Corp., then the third-largest bank failure in U.S. history.

“We came to understand that either the FDIC would protect all of the bank’s depositors, without regard to deposit insurance limits, or there would likely be a run on all the money center banks the next morning,” he said in a speech 10 years ago. “We chose the first option, without dissent.”

Contagion (via Investopedia): “A contagion is the spread of an economic crisis from one market or region to another and can occur at both a domestic or international level. Contagion can occur because many of the same goods and services, especially labor and capital goods, can be used across many different markets and because virtually all markets are connected through monetary and financial systems.”

Photo of author
Kristinn Taylor has contributed to The Gateway Pundit for over ten years. Mr. Taylor previously wrote for Breitbart, worked for Judicial Watch and was co-leader of the D.C. Chapter of FreeRepublic.com. He studied journalism in high school, visited the Newseum and once met David Brinkley.

You can email Kristinn Taylor here, and read more of Kristinn Taylor's articles here.

 

Thanks for sharing!