US Treasury Secretary Janet Yellen warned Sunday that the federal government will not bail out the failed Silicon Valley Bank.
(To see a transcript of the interview, click here.)
Yellen contended that the current situation is very different from the financial crisis that led to the collapse of Washington Mutual Bank in 2008. At that time, the federal government bailed out banks to keep the industry solvent – but Yellen told CBS’ ‘Face the Nation’ that it won’t happen again.
“We’re not going to do that again,” she said. “But we are concerned about depositors, and we’re focused on trying to meet their needs.”
Yellen predicted that the rest of the industry will remain stable, even as she noted that the Federal Reserve’s repeated interest rate hikes had created a problem for SVB while the Fed tried to combat inflation.
“The American banking system is really safe and well capitalized. It’s resilient,” she said, adding that Americans can have confidence in the “safety and soundness of our banking system.
“We want to make sure that the troubles that exist at one bank don’t create contagion to others that are sound,” she added.