Democrat Josh Gottheimer of New Jersey requested on Sunday that Treasury Secretary Janet Yellen take immediate action to prevent a run on the nation’s banking system in the wake of the failure of Silicon Valley Bank (SVB).<\/p>\n

Established in 1983, SVB has become the financial institution of choice for technology and health startups in the United States, particularly in the Silicon Valley tech corridor of California. In response to the COVID-19 pandemic, the bank reported assets of over $200 billion by the end of the previous year.<\/p>\n

Friday, however, regulators shut down the once-respected bank of venture capital investors in response to a run on deposits. Rising interest rates devalued the bank’s collateral, putting it on the verge of failure.<\/p>\n

In a letter he sent to Yellen on Sunday, the democratic congressman Gottheimer urged her to “take immediate action using all regulatory tools available.” Gottheimer suggested that the Federal Deposit Insurance Corporation<\/a> (FDIC) prioritise finding a buyer for SVB in order to “provide a seamless transition for the bank’s depositors and borrowers in the hopes of compensating depositors in full.”<\/p>\n

Additionally, Gottheimer requested that the Treasury Department and Federal Reserve encourage banks of all sizes that have relationships with SVB’s depositors to extend temporary lines of credit to the bank’s depositors in order to “assist with essential costs” such as payroll. In order to prevent contagion and reassure depositors that banks are healthy, the congressman requested that the Fed continue to provide liquidity through repurchase agreements.<\/p>\n

Gottheimer wrote in his letter, “If Americans cannot trust that their basic deposits are secure, we could experience sudden runs on banks of all sizes across the country.”<\/p>\n

“Right now, we are concerned about the depositors at SVB, as well as those at banks across the country, who were suddenly unnerved by SVB’s catastrophic failure, which unfolded in just forty-eight hours and was accelerated in part by social media and herd withdrawals,” he added.<\/p>\n

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Silicon Valley congressman Ro Khanna says \u201cmore clarity\u201d needed from Treasury Department on Silicon Valley Bank response, adding that all depositors need to be protected and be made whole. pic.twitter.com\/gTDVRTVPZ4<\/a><\/p>\n

— Face The Nation (@FaceTheNation) March 12, 2023<\/a><\/p><\/blockquote>\n