US government trying to meet needs of Silicon Valley Bank depositors but dismisses bailout
The US Treasury Secretary Janet Yellen said the government is working with banking regulators to design “appropriate policies” to address the fallout of Silicon Valley Bank and is “concerned about depositors,” but she dismissed the idea of a bailout in a potential setback for the startup ecosystem that is reeling from what is the worst bank failure since the 2008 financial crisis.
“Well let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out, and we’re certainly not looking. And the reforms that have been put in place means that we’re not going to do that again. But we are concerned about depositors and are focused on trying to meet their needs,” said Yellen in a CBS interview.
The sudden collapse of Silicon Valley Bank has sent shockwaves to the startup ecosystem as countless young firms scramble to find ways to meet the payroll and other operating expenses after the bank was taken over by the regulators on Friday.
Garry Tan, the president of kingmaker startup accelerator Y Combinator, which has over 1,000 startups that are impacted by the Silicon Valley Bank’s collapse, called on Congress on Saturday to act more decisively to save the lender.
“We are not asking for a bailout for the bank equity holders or its management; we are asking you to save innovation in the American economy. We ask for relief and attention to an immediate critical impact on small businesses, startups, and their employees who are depositors at the bank. According to the NVCA, Silicon Valley Bank has over 37,000 small businesses with more than $250,000 in deposits,” wrote Y Combinator in an open petition signed by over 3,500 chief executives.
The Silicon Valley Bank crisis also has implications for firms over 8,000 miles away. Over 60 YC-backed Indian startups have more than $250,000 stuck in accounts with Silicon Valley Bank and nearly two dozen have more than $1 million tied with the lender, TechCrunch reported earlier.
