Yellen rejects Silicon Valley Bank bailout as regulators auction assets

The US treasury secretary, Janet Yellen, said on Sunday there would be no bailout for Silicon Valley Bank, which collapsed this week, raising fears of a crisis, but also said the Biden administration was working with regulators to help depositors hit by the fall of SVB.

Yellen said conditions did not match the 2008 financial crisis, when the collapse of large institutions threatened to bring down the global financial system. She also sought to calm fears the $23tn US banking system could be affected by the fall of a regional bank.

The sudden failure of a California bank with assets valued at $212bn, which primarily lent to tech startups, rattled investors.

On Friday, SVB was placed under the control of the Federal Deposit Insurance Corporation (FDIC), which guarantees deposits up to $250,000. Many companies and individuals stand to lose more than half of deposits in excess of that, according to some estimates.

Warner said he had been in talks with regulators, the White House and the Federal Reserve. The best outcome, he said, would be to find a buyer for SVB assets before markets opened in Asia.

An FDIC auction of SVB assets began on Saturday with final bids due by Sunday afternoon, Bloomberg reported.SVB held more than $175bn in deposits, most uninsured. The auction is designed to make those deposits available as soon as Monday, when the federally managed bank reopens.

The Fed and the FDIC were considering the creation of a fund to backstop deposits at banks that run into trouble, Bloomberg reported.

On Saturday, the White House said Joe Biden had spoken to the governor of California, Gavin Newsom.

Regional banks that have seen values plunge include Signature Bank, First Republic Bank, Western Alliance and PacWest.

Bill Ackman, a billionaire hedge fund manager, said failure to protect SVB depositors could spark withdrawals of uninsured deposits elsewhere.