Following Silicon Valley Bank's abrupt collapse this week, US Treasury Secretary Janet Yellen has said that the government will not intervene to save the institution. Depositors have been reassured by Yellen that the government will support them during the closure, though. The bank has been taken over by the Federal Deposit Insurance Corporation (FDIC), and procedures are being devised to help US clients who may be harmed by the shutdown.
SVB Financial was shut down by California regulators after it attempted to sell and failed to raise funds. The financial sector is looking for explanations and a way ahead as a result of this being the worst banking failure since the 2008 financial crisis.
Yellen claimed that although major bank owners and investors were helped during the financial crisis, reforms have been put in place to stop this from happening in the future in an interview with CBS. Yellen underlined that in order to determine the right course of action, the government is collaborating with regulators.
But, Yellen continued, "We are worried about depositors, and we're focused on trying to meet their demands. Depositor protection is the government's top concern, not saving the bank. The government won't save Silicon Valley Bank; instead, its job will be to support creditors while the bank closes.
The FDIC has assumed management of the bank as procedures are created to help clients who may be harmed by the shutdown. As of yet, no concrete government action has been taken.
The failure of Silicon Valley Bank serves as a reminder of the value of prudent money management, particularly in the quickly developing crypto sector. Investors and stakeholders need to keep a close eye on banks and financial institutions to make sure they follow best practices and have enough capital to withstand market volatility.