The U.S. government has begun selling its assets while drawing a line on bailout measures for Silicon Valley Bank (SVB).
According to foreign media such as the Wall Street Journal (WSJ) on the 12th (local time), the US Federal Deposit Insurance Corporation (FDIC), which manages SVB assets, is conducting an auction process.
The property auction will be held until this afternoon. It is known that SVB’s capital increase plan failed and the sale of the company was promoted, but no buyer appeared.
Earlier, Treasury Secretary Janet Yellen said she was not considering a bailout for SVB, which was requested by some. “I want to make it clear that investors and owners of the big banks were bailed out during the financial crisis 15 years ago,” he said. “We will never do that again.”
The reason why the U.S. government is promptly promoting asset sales while refusing bailout measures is that most of SVB’s customers have deposits exceeding the deposit protection amount of $250,000. Bank assets must be quickly sold to secure funds so that deposits can be returned to customers such as startups and funds.
There are concerns that delays in deposit payments could lead to serial bankruptcies as startups suffer from financial difficulties. If such financial instability increases, there is a possibility that the situation will spread to other banks.
The best solution is for FDIC to find a buyer in a short amount of time. Yellen also said that regulators are looking at several options, including takeovers.
However, it is expected that it will take considerable time until the asset auction is completed. SVB is likely to be sold over the next few weeks, according to The Associated Press.
Citing sources, the WSJ reported that in addition to asset auctions, regulators are considering implementing other potential measures to prevent the problem from spilling over into the financial system.
The US business world put forward the position that SVB should be acquired quickly to minimize market confusion.
Tom Quadman, vice president of the Center for Capital Markets Competition at the U.S. Chamber of Commerce, issued a statement and said, “We must ensure access to all bank depositors,” and “I urge (SVB) to help get it acquired quickly.”
US politicians moved quickly over the weekend to prevent the spread of the situation.
US President Joe Biden spoke on the phone with California Governor Gavin Newsom the day before to discuss countermeasures.
After the call with President Newsom, Governor Newsom said, “The goal is to stabilize the situation as quickly as possible and protect jobs, livelihoods, and the entire innovation ecosystem that has served as a tent for our economy.”
“The government has the tools to deal with the situation,” said House Speaker Kevin McCarthy, a Republican.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.