The entity, the 16th largest such center in the country, collapsed when multiple companies withdrew their funds, after an announcement that the institution would seek a capital increase to face its financial difficulties.
Due to the uncertainties generated, banking regulators were forced to take charge of the situation and appointed the Federal Deposit Insurance Corporation as receiver who, in turn, determined to close operations of Silicon Valley, based in California.
About a possible rescue, Yellen revealed that during the financial crisis (2008-2009) there were investors and owners of large banks that benefited from aid, but added that after the reforms applied in the sector, it is not expected to resort to this procedure again.
While the government is monitoring it for domino effects, she added that the state of the nation’s banking institutions is strong and depositors should not feel in doubt about trusting them with their money.
“America’s economy depends on a safe and sound banking system,” she said in an interview broadcast on CBS News.
Following the Silicon Valley debacle, which controlled approximately $212 billion, analysts and lawmakers now argue that a law enacted under the Donald Trump administration (2017-2021) made the failure experienced by the institution and its resulting federal takeover more likely. .
The decision by the former president and congressional Republicans to reduce both supervision and capital requirements contributed to a costly collapse, Sen. Elizabeth Warren said.
The lawmaker was referring to a rule that weakened post-financial crisis regulations for banks with between $50 billion and $250 billion in assets, which at the time raised fears of systemically risky failures.