Yellen: U.S. Banking System ‘Safe and Well-Capitalized’ in Wake of Silicon Valley Bank Collapse

Treasury Secretary Janet Yellen said Sunday on CBS’s “Face the Nation” that the U.S. banking system was strong after the collapse of Silicon Valley Bank last week.

Partial transcript as follows:

MARGARET BRENNAN: I want to get straight to it because the markets will soon reopen for trading. Does the government need to intervene and take emergency measures because of SVB’s failure?

YELLEN: Well, let me say America’s economy relies on a safe and sound banking system that can provide for the credit needs of our households and businesses. So whenever a bank, especially one, like Silicon Valley Bank with billions of dollars in deposits fails, it’s clearly a concern. From the standpoint of depositors, many of which may be small businesses, they rely on access to their funds, to be able to pay the bills that they have, and they employ tens of thousands of people across the country. We’ve been hearing from those depositors and other concerned people this weekend. So let me say that I’ve been working all weekend with our banking regulators to design appropriate policies to address this situation. I can’t really provide further details at this time. But what I do want to do is emphasize that the American banking system is really safe and well-capitalized, it’s resilient. In the aftermath of the 2008 financial crisis. New controls were put in place better capital and liquidity supervision, and was tested during the early days of the pandemic, and proved its resilience so Americans can have confidence in the safety and soundness of our banking system.

BRENNAN: Can you say whether these problems were unique to Silicon Valley Bank? Or can you say whether there will be other regional bank failures?

YELLEN: Well, look, let me just say that we want to make sure that the troubles that exist at one bank don’t create contagion to others that are sound. And goal always is supervision and regulation is to make sure that contagion can’t- can’t occur.

BRENNAN  So I know you don’t want to get into the details of that. But obviously, there are a lot of questions out there this morning. Your counterpart in the United Kingdom has said that the government there has ruled out a bailout of the UK arm of Silicon Valley Bank. Have you also ruled out that kind of government intervention?

YELLEN: Well let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out, and we’re certainly not looking. And the reforms that have been put in place means that we’re not going to do that again. But we are concerned about depositors and are focused on trying to meet their needs.

BRENNAN: For those depositors, about 85% of SVBs accounts were uninsured. And, as you were saying, a lot of different tech firms relied on them. Do you believe that depositors should be paid back in full? Will they?

YELLEN: Look, I’m not going to comment on the details of the situation at this point. I simply want to say that we’re very aware of the problems that depositors will have, many of them are small businesses that employ people across the country. And of course, this is a significant concern, and working with regulators to try to address these concerns.

BRENNAN: Do you expect a deal or something to happen that can reassure the markets before Asia opens tonight, and US markets open tomorrow?

YELLEN: We certainly are working to address the situation in a timely way.

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