The government took decisive and forceful action after Silicon Valley Bank collapsed last week, Treasury Secretary Janet Yellen said Thursday before the Senate Finance Committee.
The government used money from the Deposit Insurance Fund, which is funded by fees paid by banks, Yellen said.
Some Republicans are critical of the decision to backstop deposits beyond the $250,000 limit of the Federal Deposit Insurance Corp.—calling that backstop a government bailout.
Yellen is the first Biden administration official to face lawmakers over the bank’s collapse. The hearing was meant to address President Joe Biden’s budget proposal for the next fiscal year.
What about the rest of the world’s economy? The European Central Bank on Thursday raised its key interest rates by half a percentage point—a relatively large increase meant to fight inflation. European Central Bank President Christine Lagarde deemed the European banking system “resilient.”
On Wednesday, shares in the Swiss bank Credit Suisse lost roughly a quarter of their value yesterday, forcing the Swiss central bank to intervene and loan Credit Suisse $54 billion to stabilize its finances and send its stock climbing Thursday.
This story originally appeared in WORLD. © 2023, reprinted with permission. All rights reserved.