This post is by Om Malik from On my Om

There seems to be light at the end of the tunnel, even though it isn’t clear as to when founders and wider Silicon Valley community can exhale, even for a minute. The US Treasury Secretary Janet Yellen spoke to the Face the Nation this morning. Her comments reveal that the government doesn’t want it to become a contagion that spreads to other banks. As many have said, this could undermine the faith in US banking system from the point of view of depositors. 

TL:DR from a Silicon Valley point of view — there won’t be a bailout of the bank. Instead, the focus is going to be entirely on the depositors. She and other federal reserve regulators understand the gravity of the situation and need of the hour. 

Here are the bits from her comments that I found relevant. 

  • Whenever a bank, especially one, like Silicon Valley Bank with billions of dollars in deposits fails, it’s clearly a concern. From the standpoint of depositors, many of which may be small businesses, they rely on access to their funds, to be able to pay the bills that they have, and they employ tens of thousands of people across the country. 
  • We’ve been hearing from those depositors and other concerned people this weekend. So let me say that I’ve been working all weekend with our banking regulators to design appropriate policies to address this situation. 
  • We want to make sure that the troubles that exist at one bank don’t create contagion to (Read more…)