Yellen defends government intervention to avoid another SVB
The Treasury Secretary of the U.S. Janet Yellen said the federal government will intervene if it is necessary to protect other small lenders.
Nearly two weeks after the collapse of three United States banks – Silicon Valley Bank (SVB), Silvergate and Signature- Treasury Secretary Janet Yellen said the federal government is ready to take action if needed.
According to a Bloomberg report of excerpts from a speech Yellen will give on Tuesday at the American Bankers Association in Washington D.C., the Treasury Secretary said:
“Our intervention was necessary to protect the broader US banking system, and similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.”
Yellen is set to defend recent measures taken by the government to defend the banks and the greater economic impact of the situation, calling the government actions “decisive and forceful actions.”
Additionally she said the government intervention helped to maintain the “important role” of small and mid-size lenders in the U.S. economy.
“The Treasury is committed to ensuring the ongoing health and competitiveness of our vibrant community and regional banking institutions.”
U.S. regulators began swiftly working on a plan following the banking crisis, during which Yellen initially said no bailout would be necessary. Instead insured and uninsured deposits were guaranteed at both SVB and Signature by the regulators. The U.S. Federal Reserve also launched a new way to help lenders cover withdrawals.
A meeting has been announced by Congress which is scheduled for Mar. 29, which will delve into failures of SVB and Signature Bank
Related: Breaking: SVB Financial Group files for Chapter 11 bankruptcy
U.S. President Joe Biden said he is “firmly committed” to holding accountable whoever was responsible for the recent collapses. Biden also stated that shielding depositors involved with SBV and Signature will be at ‘“no cost to the taxpayer.”
The Department of Justice and the Securities and Exchange Commission have both reportedly opened inquiries into the incident. Meanwhile, economists have analyzed that over 186 banks in the U.S. are well-positioned for collapse.