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Bankruptcy of Silicon Valley Bank | US government wants to avoid contagion, but rules out a bailout



(Washington) The American government wants to prevent the bankruptcy of the American bank Silicon Valley Bank (SVB) from causing a contagion to the rest of the banking system, indicated Sunday the American Secretary of the Treasury, Janet Yellen, who nevertheless ruled out a bailout of the establishment.

“We want to make sure that the problems that affect one bank do not create contagion to others that are strong,” said Yellen during a CBS interview.

The Deposit Guarantee Agency (FDIC), an offshoot of the US government, took control of Silicon Valley Bank on Friday, on the verge of implosion under the effect of massive withdrawals from its customers.

If the big banks have so far been spared, several medium-sized or regional establishments unscrewed on the stock market on Friday, fled by worried investors.

This is particularly the case of the Californian First Republic, which dropped nearly 30% in two sessions, Thursday and Friday, or Signature Bank, cut by a third of its value since Wednesday evening.

Both institutions have a large proportion of corporate clients in their portfolio, whose deposits often exceed the FDIC’s maximum insured amount of $250,000 per depositor, which could lead them to withdraw their funds.

Janet Yellen explained Sunday that the government was working this weekend, with the FDIC, to “resolve” the situation of SVB, of which approximately 96% of the deposits are not covered by the refund guarantee of the FDIC.


US Treasury Secretary Janet Yellen

” I am certain [que la FDIC] is considering a wide range of solutions, which includes an acquisition” by another bank, the Treasury Secretary said.

On the other hand, it ruled out a rescue of SVB via an injection of public money.

“During the financial crisis [de 2008], investors in large systemic banks”, whose fall the authorities believe would pose a risk to the entire financial system, “have been rescued” by the US government, she recalled. “We’re not going to do it again. »

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