US Treasury Secretary Janet Yellen ruled out a bailout for Silicon Valley Bank (SVB) this week, trying to pull itself out of the 2008 financial crisis, while the regulator’s search for a buyer for the bank intervened on Friday.
On CBS’ “Face the Nation,” Yellen assured the government that it would not seek a bank bailout, but acknowledged there are concerns about SVB depositors, including many beginners, and said the government is “focused on trying to. Respond to their needs.”
The California-based bank announced last Wednesday that it planned to raise capital to deal with its financial difficulties, which have caused it to dump $21 billion worth of investments, with losses of about $1.8 billion.
The announcement prompted many customers to withdraw funds, after which regulators had to close the bank on Friday due to a lack of liquidity, and the company’s share price subsequently fell, which in turn affected the banking sector in general, both in the United States and other countries.
The Federal Deposit Insurance Corporation (FDIC) announced that the 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 most of this figure, according to specialized media.
Fearing spillover effects to regional US banks, the official said in the program that the country’s banking system is “safe and well capitalized” and attributed the SVB’s collapse to the Federal Reserve’s interest rate hike policy to control inflation. .
In that regard, he added that the regulator is considering “available options” to remedy the situation, including the acquisition of SVB by another entity, which Bloomberg reported this week that the FDIC has begun an auction process that could end in several. clocks.
Bloomberg indicates that the FDIC, which took control of the bank on Friday, opened the auction process this Saturday and will receive final bids Sunday night, but it could end in vain.
CNBC reported that if a buyer cannot be found, the authorities will consider other options, such as a mechanism to protect vulnerable deposits – more than $250,000 – or the Federal Reserve Banking Service, which supports SVB’s exposure.
Meanwhile, nearly 500 venture capital firms have joined an open letter following the regulatory intervention in which they pledge to support SVB and encourage partners to “renew” their relationship with the bank if it is “acquired” and properly capitalized.
The leader of the US House of Representatives, Republican Kevin McCarthy of California, said on Fox’s “Sunday Morning Futures” today that he hopes the federal government, which is working smoothly with the banking regulator, will “announce the markets are open” tomorrow, Monday.
Source: El Diario