The U.S. government would not bail out Silicon Valley Bank (SVB), Treasury Secretary Janet Yellen said on Sunday as systemic "contagion" worries spread across the venture capital and technology industries."Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out, and we're certainly not looking," Yellen said in an interview. "The reforms that have been put in place means that we're not going to do that again."She said the government was concerned about depositors and focused on trying to meet their needs.California Department of Financial Protection and Innovation closed SVB on Friday after depositors -- which were mainly struggling tech start-ups -- began a run on the bank. It was the second largest bank to go under in U.S. history, only behind the collapse of Washington Mutual during the 2008 financial crisis.The move came after the Santa Clara-headquartered bank announced Wednesday that it lost 1.8 billion U.S. dollars in the sale of U.S. treasuries and mortgage-backed securities it had invested in, owing to rising interest rates. The bank was also facing shrinking deposits as the tech industry struggled.The bank's operations will resume on Monday with the U.S. Federal Deposit Insurance Corporation (FDIC) in charge.All insured depositors will have "full access" to "insured" deposits no later than Monday morning, and SVB's official checks "will continue to clear," said the FDIC.Most businesses of the start-up-focused bank operate in Silicon Valley, a hub of the world's high-tech industry."Silicon Valley Bank has been a trusted and long-time partner to the venture capital industry and our founders. For forty years, it has been an important platform that played a pivotal role in serving the startup community and supporting the innovation economy in the US," wrote a statement of support for SVB, which has been signed by 537 venture capitals.SVB's closure shocked the start-up ecosystem. The firms have been scrambling to find ways to meet their payroll and other operating expenses after the bank was taken over by the regulators.According to Garry Tan, president of the start-up accelerator Y Combinator, over 1,000 startups in his portfolio are impacted by the SVB collapse. The payroll-related furlough or shutdown will impact more than 10,000 small businesses and start-ups, which use SVB as their sole bank account.He called on Congress to act more decisively to save the bank on Saturday."We are not asking for a bailout for the bank equity holders or its management; we are asking you to save innovation in the American economy. We ask for relief and attention to an immediate critical impact on small businesses, startups, and their employees who are depositors at the bank," wrote Y Combinator in an open petition signed by over 5,000 CEOs and founders representing over 400,000 employees.According to the National Venture Capital Association, SVB has over 37,000 small businesses with more than 250,000 U.S. dollars in deposits, the petition added."We're very aware of the problems that depositors will have, many of them are small businesses that employ people across the country ... This is a significant concern," Yellen said on the issue.The bank has also been the go-to financial institution for the California wine industry. Thousands of wineries were locked out of their SVB accounts, The San Francisco Chronicle said in a report.The impact of SVB collapse has been regional so far. But "in the worst-case scenario, if it triggers a general crisis of confidence in the bank system, customers may tend to withdraw their deposits, investors may sell off their banking stocks, creating a chain of bank runs like a domino effect," said Haiyan Yu, a senior investor in Silicon Valley.According to Tan, the SVB failure has a real risk of systemic contagion. "Its collapse has already instilled fear among founders and management teams to look for safer havens for their remaining cash, which can trigger a bank run on every other smaller bank," he said.Tan warned that the shockwave will impact the U.S. technology industry and "ultimately set back U.S. competitiveness by a decade or more."Yellen argued that the fallout of the SVB collapse was a different situation from the financial crisis in 2008."Americans need to feel confident that the banking system is safe and sound and that it can meet the credit needs of households and businesses," she said.The U.S. government would not bail out Silicon Valley Bank (SVB), Treasury Secretary Janet Yellen said on Sunday as systemic "contagion" worries spread across the venture capital and technology industries."Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out, and we're certainly not looking," Yellen said in an interview. "The reforms that have been put in place means that we're not going to do that again."She said the government was concerned about depositors and focused on trying to meet their needs.California Department of Financial Protection and Innovation closed SVB on Friday after depositors -- which were mainly struggling tech start-ups -- began a run on the bank. It was the second largest bank to go under in U.S. history, only behind the collapse of Washington Mutual during the 2008 financial crisis.The move came after the Santa Clara-headquartered bank announced Wednesday that it lost 1.8 billion U.S. dollars in the sale of U.S. treasuries and mortgage-backed securities it had invested in, owing to rising interest rates. The bank was also facing shrinking deposits as the tech industry struggled.The bank's operations will resume on Monday with the U.S. Federal Deposit Insurance Corporation (FDIC) in charge.All insured depositors will have "full access" to "insured" deposits no later than Monday morning, and SVB's official checks "will continue to clear," said the FDIC.Most businesses of the start-up-focused bank operate in Silicon Valley, a hub of the world's high-tech industry."Silicon Valley Bank has been a trusted and long-time partner to the venture capital industry and our founders. For forty years, it has been an important platform that played a pivotal role in serving the startup community and supporting the innovation economy in the US," wrote a statement of support for SVB, which has been signed by 537 venture capitals.SVB's closure shocked the start-up ecosystem. The firms have been scrambling to find ways to meet their payroll and other operating expenses after the bank was taken over by the regulators.According to Garry Tan, president of the start-up accelerator Y Combinator, over 1,000 startups in his portfolio are impacted by the SVB collapse. The payroll-related furlough or shutdown will impact more than 10,000 small businesses and start-ups, which use SVB as their sole bank account.He called on Congress to act more decisively to save the bank on Saturday."We are not asking for a bailout for the bank equity holders or its management; we are asking you to save innovation in the American economy. We ask for relief and attention to an immediate critical impact on small businesses, startups, and their employees who are depositors at the bank," wrote Y Combinator in an open petition signed by over 5,000 CEOs and founders representing over 400,000 employees.According to the National Venture Capital Association, SVB has over 37,000 small businesses with more than 250,000 U.S. dollars in deposits, the petition added."We're very aware of the problems that depositors will have, many of them are small businesses that employ people across the country ... This is a significant concern," Yellen said on the issue.The bank has also been the go-to financial institution for the California wine industry. Thousands of wineries were locked out of their SVB accounts, The San Francisco Chronicle said in a report.The impact of SVB collapse has been regional so far. But "in the worst-case scenario, if it triggers a general crisis of confidence in the bank system, customers may tend to withdraw their deposits, investors may sell off their banking stocks, creating a chain of bank runs like a domino effect," said Haiyan Yu, a senior investor in Silicon Valley.According to Tan, the SVB failure has a real risk of systemic contagion. "Its collapse has already instilled fear among founders and management teams to look for safer havens for their remaining cash, which can trigger a bank run on every other smaller bank," he said.Tan warned that the shockwave will impact the U.S. technology industry and "ultimately set back U.S. competitiveness by a decade or more."Yellen argued that the fallout of the SVB collapse was a different situation from the financial crisis in 2008."Americans need to feel confident that the banking system is safe and sound and that it can meet the credit needs of households and businesses," she said.
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