Treasury Secretary Janet Yellen detailed on Tuesday the scramble by US officials last March to prevent the implosion of Silicon Valley Bank from infecting the broader economy.
“I will never forget it,” Yellen told lawmakers during a hearing before the House Financial Services Committee, referring to the weekend after Silicon Valley Bank failed.
“We did everything we could to put together a package of measures that would stop what could have become a run on the banking system — to the huge detriment to our economy and to hardworking Americans and businesses,” Yellen said.
Yellen was responding to a question from Rep. Maxine Waters, the top Democrat on the committee, about efforts US officials took to “save this country from experiencing a bank run that could have actually crippled our banking system.”
Yellen noted that Silicon Valley Bank’s failure was caused by mismanagement of their interest rate risk and a heavy reliance on uninsured deposits concentrated in tech firms active on social media.
“We saw a run that was the largest and fastest of anything anyone has ever seen in this country,” Yellen said.
Although the bank crisis subsided after federal regulators launched emergency programs, some regional banks have come under renewed pressure in recent days.
Even as Yellen was speaking, shares of New York Community Bancorp plunged 15% on the day. The regional bank recently disclosed a surprise loss and a spike in loan losses as commercial real estate loans go bad.
This story is developing and will be updated.
Read the full article here