U.S. Treasury Secretary Janet Yellen said Sunday that the federal government would not bail out Silicon Valley Bank, but is working to help depositors who are concerned about their money.
The Federal Deposit Insurance Corporation insures deposits up to US$250,000, but many of the companies and wealthy people who used the bank -- known for its relationships with technology startups and venture capital -- had more than that amount in their account. There are fears that some workers across the country won't receive their paycheques.
With Wall Street rattled, Yellen tried to reassure Americans that there will be no domino effect after the collapse of Silicon Valley Bank.Silicon Valley Bank, based in Santa Clara, Calif., is the nation's 16th-largest bank. It was the second biggest bank failure in U.S. history after the collapse of Washington Mutual in 2008. The bank served mostly technology workers and venture capital-backed companies, including some of the industry's best-known brands.
Sheila Bair, who was the FDIC chair during the 2008 financial crisis, recalled that with almost all the bank failures during that time, "we sold a failed bank to a healthy bank. And usually, the healthy acquirer would also cover the uninsured because they wanted the franchise value of those large depositors so optimally, that's the best outcome.
House Speaker Kevin McCarthy, R-Calif., told Fox News Channel's "Sunday Morning Futures" that he hoped the administration would announce the next steps as soon as Sunday.
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