US: No financial rescue package for the bank that went bankrupt

The Federal Deposit Insurance Corporation offers insurance for up to $250,000, but many of the wealthy companies and persons who used this bank known for relations with technology and capital investment companies had this amount in their accounts. There are fears that some employees throughout the country do not receive their salaries.

Mrs. Yellen, speaking in an interview for the show “Face the Nation” of the CBS channel, gave little detail about the government's next steps. But she stressed that the situation is much different from the financial crisis and nearly 15 years ago, followed by financial rescue packages for banks, with the aim of protecting this sector.

We won't do this again”, she said. “But we're concerned about depositors and we're focused on trying to meet their” needs.

With the Wall Street Stock Exchange already shaken, Mrs. Yellen tried to assure Americans there would be no domino after Silicon Valley Bank's bankruptcy.

The American banking system is really safe and well capitalized”. She said. “It's stable”.

Silicon Valley Bank, based in Santa Clara, California, is the country's 16th largest bank. This is the second biggest banking failure in the history of the United States, following Washington Mutual's bankruptcy in 2008. The bank served mainly to those working in the technology sector and companies supported by entrepreneurial capital, including some of the industry's best-known brands.

Silicon Valley Bank started going towards bankruptcy when its clients, mostly technology companies that needed money while trying to get funding, began withdrawing their deposits. The bank had to sell lost bonds to cover the withdrawals, bringing the largest failure of an American financial institution since the financial crisis.

Mrs. Yellen named it an increase in interest rates that were raised by the Federal Reserve to fight inflation as the main problem for Silicon Valley Bank. Many of its activities, such as bonds or letters of insurance-based value, lost market value while rates increased.

“Problems with the technology sector are not in the background of problems in this bank”, she said.

Mrs. Yellen said she expected the regulators to consider a wide range of available options “, including the purchase of Silicon Valley Bank from another institution. However, so far, no potential buyer has appeared.

President Joe Biden and the Democrat governor of California, Gavin Newsom, spoke on Saturday about “attempts to resolve the”, though the White House did not provide additional details about the next steps.

Newsom said the goal was “stabilisation of the situation as soon as possible, to protect jobs, the lives of people and the entire innovation ecosystem that has served as a central pillar for our economy”.