"Face the Nation" on March 12, 2023
Interview
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Good morning, Margaret.
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Well, let me say America's economy relies on a safe and sound banking system that can provide for the credit needs of our households and businesses.
So, 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 have been working all weekend with our banking regulators to design appropriate policies to address this situation.
I can't really provide further details at this time.
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But what I do want to do is emphasize that the American banking system is really safe and well-capitalized. It's resilient.
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Well, look, let me just say that we want to make sure that the troubles that exist at one bank don't create contagion to others that are sound.
And a goal always of supervision and regulation is to make sure that contagion can't -- can't occur.
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Well, 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, and the reforms that have been put in place means that we're not going to do that again. But we are concerned about depositors and are focused on trying to meet their needs.
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We certainly are working to address the situation in a timely way.
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Yes.
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I think it depends on how this situation is resolved.
But I'm well aware that many start-up firms have deposits and venture capital firms have deposits at this bank that have been affected by its failure. So this is something we're working to try to resolve.
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I would say that, although the tech sector has been suffering from a downturn and it's had some significant layoffs, the problems of this bank, from reporting about its situation, suggest that, because we're in a higher interest rate environment, assets that it holds, many of which are Treasury assets or mortgage-backed securities that are guaranteed by the government, lose market value.
And the problems of the tech sector aren't at the heart of the problems of this bank.
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The Federal Reserve is independent and charged with making judgments about what the appropriate course of action is to address financial risks and also to achieve their inflation and employment goals.
And I'm not going to comment on what the appropriate response is for them. They will be evaluating this in the days and weeks to come.
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So, this is really a decision for the FDIC, as it decides on what the best course is to resolve this firm.
And I'm sure they're considering a wide range of available options that would include acquisitions.
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Thank you so much, Margaret.
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