The US government has ruled out a bailout of failed Silicon Valley Bank (SVB), US Treasury Secretary Janet Yellen said on Sunday. However, he hopes to avoid contagion to the rest of the banking system.
We want to make sure that issues affecting a bank do not infect others which are solid,” the US Treasury Secretary said in an interview with CBS.
The Deposit Guarantee Agency (FDIC), an offshoot of the US government, took control of Silicon Valley Bank on Friday, on the verge of implosion under the effect of massive withdrawals from its customers. While the big banks have so far been spared, several medium-sized or regional establishments have fallen on the stock market on Friday, leaked by worried investors. This is particularly the case of the Californian First Republic, which dropped nearly 30% in two sessions, Thursday and Friday, or Signature Bank, cut by a third of its value since Wednesday evening. Both institutions have a large proportion of corporate clients in their portfolio, whose deposits often exceed the maximum amount insured by the FDIC, i.e. $250,000 per depositorwhich might cause them to withdraw their funds.
Janet Yellen explained on Sunday that the government was working this weekend, with the FDIC, on “a resolution” of the situation of SVB, of which approximately 96% of deposits are not covered by the FDIC Money Back Guarantee. “I’m sure that (the FDIC) is considering a wide range of solutions, which includes an acquisition” by another bank, said the Treasury Secretary.
She has, however, ruled out a rescue from SVB through an injection of public money. “During the financial crisis (of 2008), investors in large systemic banks”, which the authorities believe are the fall would present a risk for the entire financial system, “have been rescued” by the US government, she recalled. “We’re not going to do it once more. »
