US rules out bailout for Silicon Valley Bank, auction reportedly underway

US Treasury Secretary Janet Yellen on Sunday (March 12) ruled out a government bailout for the collapsed Silicon Valley Bank (SVB). She said a bailout for the bank was out of the question but noted the government wanted to avoid a financial "contagion" from implosion of the bank.

She emphasised that the situation was much different from the financial crisis 15 years ago, which led to bank bailouts to protect the industry.

"We want to make sure that the troubles that exist at one bank don't create contagion to others that are sound," Yellen said during an interview with CBS.

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Meanwhile, Bloomberg reported that Federal Deposit Insurance Corp (FDIC) kicked off SVB auction late Saturday. According to the report, the winner may not be known till late on Sunday (local time).

Reports: SVB employees siphoned annual bonuses before collapse

On Friday, US regulators pulled the plug on SVB -- a key lender to US start-ups since the 1980s -- after a run on deposits made it no longer tenable for the medium-sized bank to stay afloat on its own.

Yellen said reforms made after the 2008 financial crisis meant the government was not considering a bailout for SVB.

"During the financial crisis, there were investors and owners of systemic large banks that were bailed out... and the reforms that have been put in place means that we're not going to do that again," she said.

"But we are concerned about depositors and focused on trying to meet their needs."

Explained | How Silicon Valley Bank crisis unfolded in 48 hours

Following SVB's disclosure on Wednesday, the banking sector was punished by investors. The sector slumped 30 per cent in two sessions on Friday. Signature Bank, a cryptocurrency-exposed lender, lost a third of its value since Wednesday evening.

Read | Did Silicon Valley Bank hoodwink everyone before its collapse?

Yellen said on Sunday that the government was working with the US deposit guarantee agency, the FDIC, on a "resolution" of the situation at SVB, where approximately 96 per cent of deposits are not covered by the FDIC's reimbursement guarantee.

"I'm sure they (the FDIC) are considering a wide range of available options that include acquisitions," she said.

(With inputs from agencies)

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