Transcript: Treasury Secretary Janet Yellen on “Face the Nation”, March 12, 2023

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 Strassmann, thank you. We now go 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 step in and take emergency measures because of SVB’s failure?

TREASURY SECRETARY JANET YELLEN: Well, let me say that America’s economy depends on a safe and sound banking system that can meet the credit needs of our households and businesses. So when a bank, especially one like Silicon Valley Bank with billions of dollars in deposits goes bankrupt, it’s clearly a concern. From the point of view of depositors, many of whom may be small businesses, they depend on access to their funds to pay the bills they have, and they employ tens of thousands of people across the country. We heard from those depositors and other concerned people this weekend. So let me say that I have been working all weekend with our banking regulators to craft appropriate policies to address this situation. I can’t really give more details at this time. But what I want to do is emphasize that the American banking system is really safe and well capitalized, it’s resilient. In the wake of the 2008 financial crisis, new controls were put in place to improve capital and liquidity supervision and were tested in the early days of the pandemic and proved their 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 if there will be other regional bank crashes?

SECRETARY YELLEN: Well, look, let me just say that we want to make sure that the problems that exist in one bank don’t infect others that are healthy. And the goal is always supervision and regulation to ensure that infection cannot occur.

MARGARET BRENNAN So I know you don’t want to get into the details of that. But of course 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 British branch of Silicon Valley Bank. Have you also ruled out that kind of state intervention?

SECRETARY YELLEN: Let me be clear that during the financial crisis there were investors and owners of systemic large banks who were bailed out, and we are certainly not looking for them. And the reforms that have been put in place mean that we won’t do it again. But we are concerned about the depositors and are focused on trying to meet their needs.

MARGARET BRENNAN: For these depositors, about 85% of SVB’s accounts were uninsured. And as you said, many different technology companies relied on them. Do you think depositors should be paid in full? Will they?

SECRETARY YELLEN: Look, I’m not going to comment on the specifics of the situation at this time. I will just say that we are 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 those concerns.

MARGARET BRENNAN: Do you expect a deal or anything to calm the markets before Asia opens tonight and the US markets open tomorrow?

SECRETARY YELLEN: We are certainly working to resolve the situation in a timely manner.

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 is already suffering 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 is something we are working on. But well aware that many startup companies have deposits and venture capital firms have deposits in this bank which has been affected by its failure. So that’s something we’re working on trying to solve.

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


I would say that although the technology sector has suffered a downturn and it has had some significant layoffs. The problems with this bank, from reporting on its situation, suggest that because we are in a higher interest rate environment, it is losing assets that it holds, many of which are government assets, or mortgage-backed securities that are guaranteed by the government. value, and the technology sector’s problems are not at the heart of this bank’s problems.


Was it simply bad management? I know there’s – there’s a lot of outcry and scrutiny of what’s happened in recent days. The CEO of that bank reportedly sold about $3 million worth of stock 24 hours before the bank went under. For people at home, can you – how do you explain if this was a problem a bad management? Continue.



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


You mentioned the interest rate environment we’re in. The Federal Reserve has been aggressively raising interest rates to try to get control of that. Do you see this as an additional risk for the financial sector? I mean, is this for people at home, do they see it as a standalone? Or should they be concerned that others will also 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 losing access to their money. And those are goals that we all embrace as financial regulators in this economy, and we will work to ensure that they are realised.


Do you foresee what’s happening now making it more difficult for Fed Chair Powell to continue with the kinds of rate hikes he’s indicated he’s planning? I mean, he said this week, it’s still a bumpy road ahead with inflation. Is his toolbox getting smaller because of the risks we’re seeing right now?


Well, Margaret, the Federal Reserve is independent and tasked with making judgments about what the appropriate course of action is to manage 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 evaluate this in the coming days and weeks.


Because for many looking at the level of risk out there, they are raising the question of whether the Fed will be able to continue doing what it is doing. They look at this looming debt ceiling deadline and the political battle over what’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 see the big picture right now?


Look, the big picture, I think we have an extremely strong economy. We just got the news on Friday that over 300,000 new jobs were created this month and labor force participation ticked up. So, despite all the job creation, we saw a slight easing of the pressure on the labor market in the form of a slightly higher unemployment rate. Inflation is on the way down, the economy is in good shape. And we must ensure that our financial system remains strong and able to support a strong economy. But I think the economy 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 what the best path is to resolve this company. And I’m sure they are considering a wide range of options available. It will include acquisitions.


Okay, we’ll take care of that. And Madam Secretary, I just wanted to ask you about the $7 trillion budget that the president just presented? Is there any part of this proposal that should be preserved?


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

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

SECRETARY YELLEN: Thank you very much, Margaret.

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