After SVB closure: USA do not want to save Silicon Valley Bank

Two days after the closure of the insolvent Silicon Valley Bank, US Treasury Secretary Yellen has ruled out a state bailout of the bank. She called on Americans to have confidence in the security of the US banking system.

Despite the recent turbulence on the financial markets after the US start-up financier Silicon Valley Bank (SVB) got into trouble, Finance Minister Janet Yellen has ruled out a government bailout of the bank. In the financial crisis a few years ago, the government intervened in this way, Yellen said in an interview with CBS television. But she emphasized: “We won’t do that again.”

Yellen referred to reforms that have been implemented since the financial crisis. At the same time, she emphasized with a view to the SVB crisis: “But we are concerned about the depositors and are concentrating on meeting their needs.”

Yellen stressed that the American banking system is “really safe” and resilient. Americans could have confidence in the safety and soundness of the US banking system.

Immense deductions

The US money house, which specializes in start-up financing, was temporarily closed after a failed emergency capital increase and placed under state control. This was announced by the US deposit insurance company FDIC on Friday.

The SVB, founded in 1983, had seen huge withdrawals of funds in the past few days as a result of liquidity concerns. SVB shares were suspended from trading on Friday after a price slide due to the acute emergency. Silicon Valley Bank’s customers were primarily employees of the tech industry and companies backed by venture capital.

Other banks under pressure

Other banks also came under considerable pressure on the stock exchange. The SVB caused a stir on Thursday when it surprisingly announced it would issue shares after a major sale of assets resulted in a loss. The shares posted a drop of a good 60 percent on Thursday alone.

Buying the bank the best solution?

Yellen expects regulators to consider several options for Silicon Valley Bank, including having the bank acquired by another institution. So far there are no prospective buyers.