The failure of Silicon Valley Bank ( SVB ) blocked tens of billions of dollars deposited there by startups and private equity funds, raising fears of a shock wave throughout the technology sector.
US Treasury Secretary Janet Yellen said on Sunday that the government wants to avoid financial “contagion” after the failure of Silicon Valley Bank , but ruled out a bailout for the entity.
“We want to make sure that problems that exist in one bank don’t create contagion to others that are strong,” Yellen said during an interview with CBS.
US authorities closed the bank on Friday to protect its clients’ deposits.
The banking sector as a whole plunged on Wall Street on Thursday, but on Friday, shares of some of the largest banks rebounded.
However, regional lenders remained under pressure, including First Republic Bank, which plunged nearly 30% in two sessions on Thursday and Friday, and cryptocurrency-exposed Signature Bank, which has lost a third of its value since the Wednesday night.
He doesn’t want a general panic
Yellen said on Sunday that the government is working with the US guarantee agency, the FDIC, on a “resolution” of the situation at SVB , as some 96% of the bank’s deposits have no guarantee of repayment.
“I’m sure they (the FDIC) are considering a wide range of available options including acquisitions,” she said.
Yellen said that the reforms carried out after the financial crisis of 2008 closed the door to a rescue of Silicon Valley Bank .
“During the financial crisis, there were investors and owners of big banks that were bailed out… and the reforms that have been put in place mean we’re not going to do that again,” he said.