Federal Government Will Not Bail Out Silicon Valley Bank

Silicon Valley Bank (SVB) shocked the industry when it collapsed Friday, leaving a plethora of companies in limbo....
Federal Government Will Not Bail Out Silicon Valley Bank
Written by Staff
  • Silicon Valley Bank (SVB) shocked the industry when it collapsed Friday, leaving a plethora of companies in limbo.

    SVB was the 16th-largest bank in the US, making it the second-largest bank collapse in US history. The bank’s collapse has left many of Silicon Valley companies and startups scrambling to address cash-flow issues.

    The collapse has also sparked questions about whether the government plans to bail the bank out, much like it did in the crash of 2008. According to AP News, Treasury Secretary Janet Yellen threw cold water on the idea.

    “We’re not going to do that again,” she said, referencing past bailouts. “But we are concerned about depositors, and we’re focused on trying to meet their needs.”

    Some experts are concerned that SVB’s collapse could spark a run on other banks, leading to more collapses. After all, it was tech companies’ run on SVB — in an effort to stay solvent during the financial downturn — that led to SVB’s failure. Yellen tried to offer reassurance that the banking system was sound.

    “The American banking system is really safe and well capitalized,” she said. “It’s resilient.”

    In the meantime, deposits insured by the government should be available Monday morning.

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