According to Reuters, U.S. Treasury Secretary Janet Yellen confirmed that the failed Silicon Valley Bank (SVB) would get help from the government but ruled out a bailout for the bank.
Reacting to calls for a government bailout of the failed bank, Yellen said she was working with other financial regulators to protect depositors. She added that there were no plans for a major government bailout.
The Treasury Secretary argued that the banking reforms created following the 2008 financial crisis would prevent the issuance of bailouts. According to her, the U.S. banking system is more resilient and better capitalized than in 2008.
Meanwhile, Yellen emphasized that the focus of their intervention would be on depositors. However, she declined to provide more information on if depositors would get a full refund. Instead, she said the government fully recognizes how much of a concern this was to depositors.
US Government’s Plan for Silicon Valley Bank
With Yellen’s comment, it appears the bank would not be getting a bailout. However, reports have revealed that the U.S. government was preparing “material action” to stem a broader financial collapse.
According to Reuters, the government is assessing the collapse’s impact and considering various options for the bank, including finding a buyer. The report suggested that the FDIC was trying to find another bank to merge with Silicon Valley Bank as of Friday.
Secretary Yellen had said the FDIC was considering a wide range of available options to resolve the firm’s issue, including an acquisition option.
SVB Collapse Puts 100,000 Jobs at Risk
Meanwhile, Y Combinator CEO Garry Tan said more than 100,000 jobs are at risk following SVB’s collapse. Because of this, Tan is asking startup CEOs and founders to sign a petition addressed to the U.S. Treasury Secretary, alongside other regulatory officials.
While the petition does not request a government bailout, it asks that the government ensure affected startups are properly protected.
“We are not asking for a bailout for the bank equity holders or its management; we are asking you to save innovation in the American economy.”
Over 5,000 CEOs and founders representing over 400,000 workers have signed the petition as of press time.
In 2008, the U.S. government bailed out several firms impacted by the financial crisis. Several analysts have argued that a similar bailout might be necessary to prevent placing other banks under equal pressure.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.