Treasury Secretary Janet Yellen reassured the public Friday that U.S. banking system remains ‘resilient’ after meeting with banking regulators in the wake of the failure of Silicon Valley Bank.
Yellen said she expressed ‘full confidence in banking regulators to take appropriate actions in response and noted that the banking system remains resilient and regulators have effective tools to address this type of event.’
She called meeting with representatives of the Fed, the FDIC, and the Office of the Comptroller of the Currency following the stunning failure of the bank, also known as SVB, Treasury said in a statement.
At the White House, economic advisor Cecilia Rouse, asked if she had confidence in the banking system, spoke of post-2008 reforms.
‘Our banking system is fundamentally different because of the changes we put in place because of 2008,’ said Rouse.
‘They have to hold more capital. They have to undergo stress tests. So we know that we had to build more resilience into our banking system, which allows it to withstand these kinds of shocks. So I do have faith that we have the tools for this sector and for regulators to be able to absorb,’ she continued. ‘We do know that our banking system is in a fundamentally different place.’
Regulators from the Federal Deposit Insurance Corporation (FDIC) seized SVB’s assets today after depositors triggered a run on the bank following the shock announcement of an $1.8 billion loss.
Treasury Secretary Janet Yellen testifies during a House Ways and Means committee hearing on President Joe Biden’s fiscal year 2024 budget request. She said in a statement that the nation’s banking system is ‘resilient’ and expressed ‘full confidence’ in bank regulators
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‘We do know that our banking system is in a fundamentally different place,’ said Chair of the Council of Economic Advisors Cecilia Rouse at the White House Friday
The banks value had reached $40 billion, four times what it was worth just five years ago. Its value in the markets plunged 66 per cent before trading was halted, with ripple effects throughout the financial services industry.
Yellen also called the failure a ‘matter of concern’ in comments to lawmakers. She was on Capitol Friday to testify about the release of the president’s $6.8 trillion budget blueprint.
With around $209 billion in assets, SVB is the second-largest bank failure in US history after the 2008 collapse of Washington Mutual.
The Federal Deposit Insurance Corporation seized SVB’s assets today as trading was halted after its shares tumbled 66 percent in premarket
A Brinks security truck is parked outside the Silicon Valley Bank in Santa Clara as investors line up outside after the bank shut its doors. The Federal Deposit Insurance Corporation (FDIC) seized SVB’s assets today as depositors – mostly tech workers and start-up firms – began withdrawing their money following the shock announcement of a $1.8bn loss
The crash is expected to have a colossal impact on the tech sector, with many start-ups using SVB as their sole account and creditor. It is the first FDIC-insured bank to fail in more than two years, the last being Almena State Bank in October 2020.
Investors started to pull their money from the bank amid a market where capital initial public offerings had cooled amid repeated rate hikes driven by the Fed. The bank sold a $21 billion bond portfolio on Wednesday to try to keep up with withdrawals, then sold stocks worth $2.25 billion on Thursday.
