To avert another SVB, Yellen supports government action

Over two weeks after the failure of three U.S. banks—Silicon Valley Bank (SVB), Silvergate, and Signature—Treasury Secretary Janet Yellen said that the federal government is prepared to assist if necessary.

According to a Bloomberg report of excerpts from a speech Yellen will deliver on Tuesday to the American Bankers Association in Washington, D.C., the Treasury Secretary said:

“Our intervention was necessary to protect the broader US banking system, and similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.”

Yellen will defend recent measures taken by the government to defend the banks and the greater economic impact of the situation, calling the government’s actions “decisive and forceful.”

In addition, she said that the government’s involvement maintained the “vital role” of small and midsized lenders in the U.S. economy.

“The Treasury is committed to ensuring the ongoing health and competitiveness of our vibrant community and regional banking institutions.”

During the financial crisis, U.S. authorities immediately started working on a plan, despite Yellen’s original assertion that no rescue would be required.

Instead, both insured and uninsured deposits were guaranteed by regulators at SVB and Signature. Meanwhile, the U.S. Federal Reserve created a new method to assist lenders in covering withdrawals.

The failures of SVB and Signature Bank will be the subject of a hearing set for March 29.

Joseph Biden, the president of the United States, said that he is “firmly committed” to holding those responsible for the recent disasters accountable.

Biden also emphasized that there would be no expense to the public for protecting depositors associated with SVB and Signature.

According to reports, both the Department of Justice and the Securities and Exchange Commission have begun investigations into the event.

However, analysts have determined that over 186 U.S. banks are vulnerable to failure.