New York (EFE).- The United States Treasury Secretary, Janet Yellen, ruled out a rescue for Silicon Valley Bank (SVB) this Sunday and tried to distance herself from the situation of the 2008 financial crisis while the regulator seeks a buyer for the bank intervened on Friday.
On the CBS show “Face the Nation”, Yellen assured that the government will not resort to a bank bailout but acknowledged that there are concerns for SVB depositors, many of them start-ups, and said that the authorities “are focused on trying to respond to their needs.”
A collapse that generates fears
The California-based bank announced last Wednesday that it was going to seek a capital increase to try to deal with its financial difficulties, which had led it to dump investments worth some $21 billion, at a loss of about 1,800 million.
That announcement led many clients to withdraw their funds, after which regulators had to close the bank on Friday for lack of liquidity, and the company’s stock price subsequently plunged, which in turn affected the banking sector in general. both in the United States and in other countries.
The Federal Deposit Insurance Corporation (FDIC) announced that SVB will reopen tomorrow Monday and that customers with guaranteed deposits -up to $250,000, according to US regulations- will have access to their money, but the most exceed that figure, according to specialized media.
Fearing a contagion effect on US regional banks, the official stated in the program that the country’s banking system is “safe and well capitalized”, and attributed the collapse of SVB to the policy of interest rate rises for part of the Federal Reserve to control inflation.
In this sense, he added that the regulator is considering the “available options” to rectify the situation, including the purchase of SVB by another entity, about which Bloomberg reported this Sunday that the FDIC has started an auction process that could end in a few hours.
Bloomberg indicates that the FDIC, which took control of the bank on Friday, opened the auction process this Saturday and will accept final bids this Sunday night, but could end without results.
Without bailing out SVB there are other options
The CNBC channel reported that, if a buyer is not found, the authorities are considering other options, such as a protection mechanism for unsecured deposits -over $250,000- or a banking service from the Federal Reserve that supports entities exposed to SVB.
Meanwhile, almost 500 venture capital firms have joined an open letter after the regulatory intervention, in which they pledge to support SVB and encourage their partners to “resume” their relationship with the bank if it is “acquired.” and capitalized appropriately.
The leader of the US House of Representatives, Republican Kevin McCarthy of California, said today on the Fox program “Sunday Morning Futures” that he hopes the federal government, which is working with the banking regulator against the clock, will “ any announcement before the markets open”, this Monday.