Transcript: Treasury Secretary Janet Yellen on

The following is a transcript of an interview with Treasury Secretary Janet Yellen that aired on “Face the Nation” on Sunday, March 12, 2023.

MARGARET BRENNAN: Mark Strassman Thank you. We go now to Treasury Secretary Janet Yellen. Madam Secretary. Good morning. 

TREASURY SECRETARY YELLEN: Good morning, Margaret.

MARGARET BRENNAN: I want to get straight to it because the markets will soon reopen for trading. Does the government need to intervene and take emergency measures because of SVB failure?

TREASURY SECRETARY JANET YELLEN: 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’ve 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. But what I do want to do is emphasize that the American banking system is really safe and well-capitalized, it’s resilient. In the aftermath of the 2008 financial crisis. Unique controls were put in place better capital and liquidity supervision, and was tested during the early days of the pandemic, and proved its resilience so Americans can have confidence in the safety and soundness of our banking system.

MARGARET BRENNAN: Can you say whether these problems were unique to Silicon Valley Bank? Or can you say whether there will be other regional bank failures?

SECRETARY YELLEN: 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 goal always is supervision and regulation is to make sure that contagion can’t- can’t occur.

MARGARET BRENNAN  So I know you don’t want to get into the details of that. But obviously, there are a lot of questions out there this morning. Your counterpart in the United Kingdom has said that the government there has ruled out a bailout of the UK arm of Silicon Valley Bank. Have you also ruled out that kind of government intervention?

SECRETARY YELLEN: 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.

MARGARET BRENNAN: For those depositors, about 85% of SVBs accounts were uninsured. And, as you were saying, a lot of different tech firms relied on them. Do you believe that depositors should be paid back in full? Will they?

SECRETARY YELLEN: Look, I’m not going to comment on the details of the situation at this point. I simply want to say that we’re very aware of the problems that depositors will have, many of them are small businesses that employ people across the country. And of course, this is a significant concern, and working with regulators to try to address these concerns.

MARGARET BRENNAN: Do you expect a deal or something to happen that can reassure the markets before Asia opens tonight, and US markets open tomorrow?

SECRETARY YELLEN: We certainly are working to address the situation in a timely way.

MARGARET BRENNAN: Now, I know you know this region of the country so well, because you served at the San Francisco Fed years ago. The tech sector has already been suffering from layoffs, it’s already under pressure, and this is really the hub of American innovation. How severe will the consequences be for that innovation?

SECRETARY YELLEN: So, I really can’t comment on what the impact will be. I think it depends on how this situation is resolved. And that’s something that we’re working on. But well aware that many startup 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.

MARGARET BRENNAN: You know, when you look big picture at this, this bank had massive exposure to this one particular industry. How did government regulators miss – miss that risk?


Well, I you know, I would, 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 a bad 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 are at the heart of the problems of this bank.


Was it simply mismanagement? I know there are- there is a lot of outcry and scrutiny of what has happened in recent days. The CEO of that bank reportedly sold about $3 million worth of shares 24 hours before the bank went under. For people at home, can you – how do you explain whether this was an issue a mismanagement? Go ahead.



Margaret, the FDIC- the FDIC has placed this bank in receivership and will be working over the weekend to manage its resolution. And in the meantime, I really can’t comment on details about the situation of this bank.


You mentioned the interest rate environment we are in. The Federal Reserve has aggressively raised rates in order to try to get control of it. Do you see that posing further risk to the financial sector? I mean, is this for people at home, do they see this as a one off? Or should they be concerned that others are also going to feel effects?


We need to be – Americans need to feel confident that the banking system is safe and sound that it can meet the credit needs of households and businesses, and that depositors don’t have to worry about about losing access to their money. And those are goals that we all embrace as financial regulators in this – in this economy, and we’ll work to try to ensure that are realized.


Do you foresee what’s happening now as making it harder for Fed Chair Powell to continue with the kind of rate hikes he’s indicated he plans? I mean, he said just this week, it’s still a bumpy road ahead with inflation. Does his toolbox get smaller because of the risks we’re seeing right now?


Well, Margaret, 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.


Because for many who look at the degree of risk out there that they raise that question of whether the Fed will be able to continue with what it’s doing. They look at this looming deadline for the debt ceiling, and the political fight about that, that’s on the calendar. And this inflation battle and it looks like there are growing risks to the direction of the economy. How do you look at that big picture right now?


Well look, big picture, I think we have an extremely strong economy. We just got news on Friday that this month, over 300,000 new jobs were created, and participation in the labor force ticked up. So, in spite of all that job creation, we saw a slight easing of labor market pressures in the form of a slightly higher unemployment rate. Inflation is coming down, the economy is in good shape. And we need to make sure that our financial system remains strong and capable of supporting a strong economy. But I think this economy is in- is in good shape.

MARGARET BRENNAN: Would you be open to a foreign bank coming in as a white knight to help stabilize the situation with Silicon Valley Bank?

SECRETARY YELLEN: 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.


 Okay, we will watch for that. And, Madam Secretary, I did just want to ask you about the $7 trillion dollar budget that the President just put forward? Is there any part of this proposal that is a must keep?


Well, look, you know, this is a budget that invests in our economy in ways that will strengthen its growth. It invests in education, in childcare, in research and development. It eases the costs that households face for health insurance for prescription drugs. It shores up the Medicare Trust Fund for decades to come. And it pays for these investments and reduces the budget deficits by almost $3 trillion over the next 10 years by asking high-income, very high-income individuals and corporations to pay their fair share. So yes, I think this budget contains many important proposals that are critical to the health of the US economy and will strengthen its fiscal position for a long time to come.

MARGARET BRENNAN: Madam Secretary, I’m told you are tight on time, and I have to leave it there. Thank you for your work, and your time this morning.

SECRETARY YELLEN: Thank you so much, Margaret.

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