Treasury Secretary Janet Yellen on Friday reacted the largest failure by a US lender in more than a decade by declaring the US banking system “remains resilient” and regulators “have effective tools” to address fallout from the collapse of Silicon Valley Bank.
Yellen called a meeting Friday with leaders from the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency to discuss developments around SVB, the Treasury said in an emailed statement.
Regulators stepped in and seized the bank Friday in a stunning downfall for a lender that had quadrupled in size over the past five years and was valued at more than $40 billion as recently as last year. That followed a tumultuous week that saw an unsuccessful attempt to raise capital and a cash exodus from the tech startups that had fueled the lender’s rise.
Just days earlier, Silvergate Capital Corp. also announced it was shutting down its bank.
The combination triggered a broader selloff in industry stocks. The Treasury statement appeared aimed at reassuring financial markets and preventing a wider investor panic.
In the US, Thursday was the worst day for the KBW Bank Index since June 2020, as its members shed more than $90 billion of value. The biggest banks in Europe lost more than $40 billion from their market capitalizations on Friday.
The agency heads Yellen convened Friday are all members of the Financial Stability Oversight Council, a body of regulators charged with monitoring risks to US financial stability.
This article was provided by Bloomberg News.