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‘The banking system remains resilient’: Treasury Secretary Yellen says she has ‘full confidence’ in US banking, at talks with regulators over SVB failure

  • Treasury Secretary Janet Yellen said U.S. banking system is ‘resilient’
  • Regulators from the FDIC seized Silicon Valley Bank’s assets on Friday
  • Treasury is monitoring ‘a few’ banks amid SVB fallout

Treasury Secretary Janet Yellen reassured the public Friday that the U.S. banking system remains ‘resilient’ after meeting with banking regulators in the wake of the failure of Silicon Valley Bank.  

Yellen expressed ‘full confidence in banking regulators to take appropriate actions in response and noted that the banking system remains resilient, and regulators have effective tools to address this type of event.’ 

The head of Treasury called a meeting with the Federal Reserve, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency following the spectacular failure of the bank, also known as SVB. 

Yellen also called the failure a ‘matter of concern’ in comments to lawmakers. She was at the Capitol on Friday to testify about the release of the president’s $6.8 trillion budget blueprint.

‘There are recent developments that concern a few banks that I’m monitoring very carefully. And when banks experience financial losses, it is and should be a matter of concern,’ she said.

At the White House, economic advisor Cecilia Rouse, asked if she had confidence in the banking system, spoke of post-2008 reforms. 

‘Our banking system is fundamentally different because of the changes we put in place because of 2008,’ said Rouse.

‘They have to hold more capital. They have to undergo stress tests. So we know that we had to build more resilience into our banking system, which allows it to withstand these kinds of shocks. So I do have faith that we have the tools for this sector and for regulators to be able to absorb,’ she continued. ‘We do know that our banking system is in a fundamentally different place.’

Regulators from the Federal Deposit Insurance Corporation (FDIC) seized SVB’s assets today after depositors triggered a run on the bank following the shock announcement of an $1.8 billion loss.

'We do know that our banking system is in a fundamentally different place,' said Chair of the Council of Economic Advisors Cecilia Rouse at the White House Friday

‘We do know that our banking system is in a fundamentally different place,’ said Chair of the Council of Economic Advisors Cecilia Rouse at the White House Friday

The banks value had reached $40 billion, four times what it was worth just five years ago. Its value in the markets plunged 66 per cent before trading was halted, with ripple effects throughout the financial services industry. 

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With around $209 billion in assets, SVB is the second-largest bank failure in US history after the 2008 collapse of Washington Mutual. 

The Federal Deposit Insurance Corporation seized SVB's assets today as trading was halted after its shares tumbled 66 percent in premarket

The Federal Deposit Insurance Corporation seized SVB’s assets today as trading was halted after its shares tumbled 66 percent in premarket

A Brinks security truck is parked outside the Silicon Valley Bank in Santa Clara as investors line up outside after the bank shut its doors. The Federal Deposit Insurance Corporation (FDIC) seized SVB's assets today as depositors - mostly tech workers and start-up firms - began withdrawing their money following the shock announcement of a $1.8bn loss

A Brinks security truck is parked outside the Silicon Valley Bank in Santa Clara as investors line up outside after the bank shut its doors. The Federal Deposit Insurance Corporation (FDIC) seized SVB’s assets today as depositors – mostly tech workers and start-up firms – began withdrawing their money following the shock announcement of a $1.8bn loss

Yellen testified in the House Friday amid fallout from the bank failure

Yellen testified in the House Friday amid fallout from the bank failure

The crash is expected to have a colossal impact on the tech sector, with many start-ups using SVB as their sole account and creditor. It is the first FDIC-insured bank to fail in more than two years, the last being Almena State Bank in October 2020. 

Investors started to pull their money from the bank amid a market where capital initial public offerings had cooled amid repeated rate hikes driven by the Fed. The bank sold a $21 billion bond portfolio on Wednesday to try to keep up with withdrawals, then sold stocks worth $2.25 billion on Thursday.  

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