Lawmakers press regulators to resolve bank blow-up

8 months ago 4

“We cannot encourage a system where banks are ‘too small to succeed.’ Additional steps need to be taken immediately to give confidence to depositors and discourage them from fleeing to only the largest banks, which is already occurring,” Gottheimer wrote, according to a draft obtained by POLITICO.

The letter calls on the FDIC to identify a buyer for the failed bank, and asks the Federal Reserve and Treasury to encourage banks that have relationships with SVB depositors to extend emergency lines of credit to clients that need assistance covering essential costs.

Gottheimer, a member of the House Financial Services Committee, which has oversight of the industry, urged the Fed to offer liquidity to other banks that might be experiencing a wave of withdrawals in the wake of the bank run that felled SVB.

Other lawmakers, including California Bay Area Democratic Reps. Ro Khanna and Anna Eshoo — whose districts are among those most heavily impacted by SVB’s failure — are clamoring for action to assure that companies will be able to make payroll and fund their operations going into next week.

Lobbyists and industry are arguing that further delay is contributing to growing unease among businesses, particularly high-tech startups.

“We’re trying to be the conduit to make sure folks in Washington understand what this means and how central [SVB] was to the plumbing of the startup economy,” Justin Field, the National Venture Capital Association’s senior vice president of government affairs, said in an interview.

The U.S. Chamber of Commerce urged banking regulators to facilitate a “quick acquisition” of the bank’s assets.

“The bank’s depositors, including a high concentration of businesses in the technology sector and startup ecosystem, need certainty that they will be able to access their cash,” Tom Quaadman, executive Vice president of the Chamber’s Center for Capital Markets Competitiveness, said in a statement.

Yellen also said in the Face the Nation interview that while the collapse of Silicon Valley Bank “is clearly a concern,” a federal bailout is not on the table.

“During the financial crisis, there were investors and owners of systemic large banks that were bailed out, and we’re certainly not looking [at that],” Yellen told host Margaret Brennan. “And the reforms that have been put in place means that we’re not going to do that again.”

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