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"
“Would you be open to a foreign bank coming in…to help stabilize the situation with [SVB]?” asks @margbrennan. @SecYellen says this “really is a decision for the FDIC,” adding, “I’m sure they’re considering a wide range of available options that would include acquisitions.”
I know the bailout was to stop contagion, but you’re right. We allow banks to make risky investments because we can make more money (indirectly), too, but then when it turns out poorly, we get mad.
The SVB bank has $175 billion in deposits. I hear different numbers but it seems the FDIC has $128 billion on hand. If so, then the taxpayers are on the hook.
This is the tech industry having problems. The banking industry is in pretty good shape. SVB and Signature were both tech heavy lenders.
In terms of bailing out depositors 100%…that is political. The tech industry and green energy industry are the primary customers of SVB. That is the Dems base.
If this happened in Midland-Odessa…there would be a completely different response.
Tech industry is always volatile. The problem now is tech firms that weren’t in bad financial position now find themselves in a horrible position because their funds are frozen with SVB…because it failed not the tech firms. Its a cascading problem they’ve started. Let’s see where it ends.
Interesting that, overall, stocks are up today. Was going to post a news story but it focused on stocks being down as they tried to only talk about banking but mentioned the market overall which simply isn’t true.
You can’t know that. The Fed acted to stop contagion. Yellen’s initial response was to not backstop SVB, but obviously the danger changed the thinking. Same would hold no matter where the banks are located.
There is no contagion. The banking industry is in very good shape overall. This isn’t 2008 all over again because the primary problem is the tech industry. That is pretty limited in it’s impact on banking. In 2008 it was home mortgages and that impacted everyone.
This is very reminiscent of 1985 in Texas. The oil industry went into the crapper and it brought a number of the Texas banks down. That was very localized.
