This Is All We Know About a Bailout of SVB and Its Depositors – Update

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Update: The Feds announced that all of the depositors of the Silicone Valley Bank would be made whole, and taxpayers will NOT bear the burden. I should note that the government only has taxpayer dollars or money they print with nothing backing it.

Secretary Yellen said, “We’re not going to do that again.” But she adds, “We are concerned about depositors and are focused on trying to meet their needs.”

Let the payoffs begin!

The WOKE SVB bank’s CEO, sold $3.6 million in stock two weeks before the California bank’s crash on Friday.  Other high-level employees sold stock this year.

The CEO of SVB was a Director of the San Francisco Fed. He is now off the Board.

They’re WOKE:

CNBC reported yesterday that the bank paid its employees their annual bonuses. That was hours before regulators took it over.

Silicon Valley Bank employees received their annual bonuses Friday just hours before regulators seized the failing bank, according to people with knowledge of the payments.

The Santa Clara, California-based bank has historically paid employee bonuses on the second Friday of March, said the people, who declined to be identified speaking about the awards. The payments were for work done in 2022 and had been in process days before the bank’s collapse, the sources said.

The Treasury won’t bail out, but the FDIC and Feds may have something in mind!

The Federal Deposit Insurance Corp. (FDIC) and Federal Reserve are discussing creating a fund to backstop deposits if more banks fail following the collapse of Silicon Valley Bank. SVB held $178 billion in deposits.

Janet Yellen spent a segment on Face the Nation this morning saying they wouldn’t bail out the bank. The Sentinel believes that they’re simply looking at a different way to do it, using a different government agency.

We are talking super-rich Democrats losing their money (and Swedish retirement funds). SVB was a WOKE bank and their depositors were influential.

Bloomberg News reported:

The Federal Deposit Insurance Corp. and the Federal Reserve are weighing creating a fund that would allow the regulators to backstop more deposits at banks that run into trouble following Silicon Valley Bank’s collapse.

Regulators discussed the new special vehicle in conversations with banking executives, according to people familiar with the matter. The hope is that setting up such a vehicle would reassure depositors and help contain any panic, said the people. They asked not to be identified because the talks weren’t public.

The vehicle is part of the agency’s contingency planning as panic spreads about the health of banks focused on the venture capital and startup communities.

Other banks are in danger. First Republic’s stock tumbled 50% on Friday.

THE YELLEN INTERVIEW ON SUNDAY

Face the Nation’s Margaret Brennan interviewed Treasury Secretary Janet Yellen about the Silicon Valley Bank (SVB ) this morning. Brennan asked if the government would bail out banks as it did during the 2008 crisis.

Secretary Yellen said, “We’re not going to do that again.” But she adds, “We are concerned about depositors and are focused on trying to meet their needs.”

“So let me say that I’ve been working all weekend with our banking regulators to design appropriate policies to address this situation. I can’t really provide further details at this time but what I do want to do is well, look, let me just say that we want to make sure that the troubles that exist at one bank don’t create contagion to others that are sound. [The] goal always of supervision and regulation is to make sure that contagion can’t occur.

Brennan asked her if there would be a bailout.

“Well, let me be clear,” Yellen said, clear as mud, “that during the financial crisis there were investors and owners of large systemic banks that were bailed out, and we’re certainly not looking…and the reforms that were 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.”

Depositors are rich tech companies, celebrities, reportedly Oprah and Harry and Meghan (not confirmed), and others.

“Do you expect a deal or something to happen that can reassure the markets before Asia opens tonight, and U.S. markets open tomorrow,” Brennan asked.

“We certainly are working to address this situation in a timely way.”

Where were the regulators?

She was asked how the government regulators missed the problem of this bank. It has massive exposure to the tech industry.

“I would say that although the tech sector has been suffering from a downturn and has had some significant layoffs, the problems of this bank from reporting about its situation suggest that because we’re in a higher interest rate environment, assets that it holds, many of which are treasury assets or mortgage-backed securities that are guaranteed by the government, lose market value. And the problems of the tech sector aren’t at the heart of the problems of this bank.”

Margaret Brennen asked, “Do you foresee what’s happening now as making it harder for fed chair Powell to continue with the kind of rate hikes he’s indicated he plans.”

 “The Federal Reserve is independent and charged with making judgments about what the appropriate course of action is to address financial risks and also to achieve their inflation and employment goals and I’m not going to comment on what the appropriate response is for them. They will be evaluating this in the days and weeks to come ”

Yellen’s great at answering with no information and lots of words.

She added that the FDIC would decide if a foreign bank could come in and buy SVB.

 


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