The U.S. government, according to Treasury Secretary Janet Yellen, will not provide a bailout for Silicon Valley Bank, but it is worried about the depositors who are suffering as a result of what is the greatest bank failure since the 2008 financial crisis and will work to assist them.
Numerous startups are scrambling to find ways to cover next week's payroll and other operating expenses after Silicon Valley Bank abruptly collapsed on Friday. The bank, which was the lifeblood of emerging tech companies, was taken over by regulators on Friday.
"Let me be clear, there were investors and owners of systemic huge banks that were bailed out during the financial crisis, and we're absolutely not seeking. We won't do that again thanks to the reforms that have been implemented. Nonetheless, we are worried about depositors and working hard to try and meet their demands, Yellen said in an interview with CBS on Sunday.
Although she gave few specifics regarding the government's next steps, Yellen insisted that the aftermath of Silicon Valley Bank was distinct from the 2008 financial catastrophe.
"Look, at this time, I won't comment on the specifics of the circumstance. I just want to add that since many depositors are small businesses that provide employment around the nation, we are quite conscious of the issues that they may face. Naturally, there are serious concerns about this, and we are working with regulators to try to address them," she told the broadcaster.
President of the kingmaker startup accelerator Y Combinator, Garry Tan, urged Lawmakers on Saturday to take more decisive action to salvage the lender, whose over 1,000 portfolio businesses are affected by the collapse of SVB.
"We are pleading with you to rescue innovation in the American economy; we are not asking for a bailout for the bank's share investors or management. We request assistance and attention due to an immediate, serious impact on small enterprises, start-ups, and the bank depositors who work for them. "Y Combinator wrote in an open petition signed by more than 3,500 chief executives that Silicon Valley Bank has over 37,000 small businesses with more than $250,000 in deposits, according to the NVCA.
Furthermore affected by the Silicon Valley Bank problem are businesses located more than 8,000 kilometres distant. About two dozen Indian firms with YC funding have more than $1 million tethered to Silicon Valley Bank, and over 60 have more than $250,000, according to data. TechCrunch
Americans must have faith in the stability of the banking system, its ability to service the credit needs of individuals and businesses, and the fact that depositors won't have to worry about losing access to their money, said Yellen.
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