On Mar. 12, United States Treasury Secretary Janet Yellen assured Silicon Valley Bank (SVB) depositors that policies were being discussed to recover lost funds.
Bail Out or Not
Speaking during CBS’s Face the Nation, Yellen reassured SVB depositors and dismissed the idea of a bailout, stating that “the reforms that have been put in place means we are not going to do that again.”
She added that the United States banking system is “safe and well-capitalized” and “resilient.”
This news came amidst fear that most of SVB’s customers are uninsured under the Federal Deposit Insurance Corporation (FDIC). This means most, including startups with funds at the tech lender, would have to fend for themselves. Some have been prompted to sell their deposits to pay salaries and other operating expenses before next week to avert liquidity pressures.
The complication arises because almost 96% of SVB’s customers were not covered by the FDIC insurance policy, which guarantees deposits up to $250,000.
The FDIC has said it would pay uninsured customers an “advance dividend” within the week, which would be a percentage of their deposits. However, this has not appeased those calling for a more comprehensive solution.
Anthony Scamarucci of
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Author: Dalmas Ngetich
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