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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. Mrs. Secretary. Good morning.

TREASURY SECRETARY YELLEN: Good morning, Margaret.

MARGARET BRENNAN: I want to get right to it because the markets will soon be open for trading again. Does the government need to intervene and implement urgent measures due to 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 fails, 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 depositors and other concerned people this weekend. So let me say that I have been working all weekend with our banking regulators to devise appropriate policies to deal with 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 during the early days of the pandemic, proving 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 failures?

SECRETARY YELLEN: Well, look, let me just say that we want to make sure that the problems that exist in one bank do not spread to 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 go into the details of that. But obviously there are a lot of questions out there this morning. Your UK counterpart has said that the government there has ruled out a bailout of the British 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 it was investors and owners of systemic large banks that were bailed out, and we’re certainly not looking. And the reforms that have been implemented mean that we will not do it again. But we are concerned about depositors and are focused on trying to meet their needs.

MARGARET BRENNAN: For these depositors, approximately 85% of SVB’s accounts were uninsured. And, as you said, a lot of different technology companies relied on them. Do you think 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 time. I just want to say that we are very aware of the problems that depositors will have, many of them are small businesses that employ people all over 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 something to calm the markets before Asia opens tonight, and American markets open tomorrow?

SECRETARY YELLEN: We are certainly working to resolve the situation in time.

MARGARET BRENNAN: Now, I know you know this region of the country so well, because you served at the San Francisco Fed many years ago. The tech sector has already suffered 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 can’t really comment on what the consequence 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 start-ups have deposits and venture capital firms have deposits in this bank which has been affected by its failure. So this is something we are working on trying to solve.

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


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


Was it simply mismanagement? I know there is – there is a lot of outcry and scrutiny of what has happened in the last few days. The CEO of that bank reportedly sold shares worth around $3 million 24 hours before the bank went under. For people at home, can you – how do you explain if this was a problem a mismanagement? Move on.



Margaret, FDIC- The FDIC has placed this bank into receivership and will work over the weekend to handle the resolution. And in the meantime, I really cannot comment on the details of the situation of this bank.


You mentioned the interest rate environment we’re in. The Federal Reserve has been aggressively raising interest rates to try to get control of them. Do you see it posing additional risks 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 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 — in this economy, and we will work to try to make sure that is realized.


Do you foresee what is happening now making it more difficult for Governor Powell to continue with the kind of rate hikes he has indicated he plans? I mean, he said just this week, it’s still a bumpy road with inflation. Is his toolbox getting smaller because of the risk we’re seeing right now?


Well, Margaret, the Federal Reserve is independent and charged with making judgments about the appropriate course of action to manage economic risks, and also to achieve inflation and employment goals. And I’m not going to comment on what is an appropriate response for them. They will evaluate this in the days and weeks to come.


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


Well look, the big picture, I think we have an extremely strong economy. We just got word 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 this 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 determines what is the best path to resolve this firm. And I’m sure they’re considering a wide range of available options. It will include acquisitions.


Okay, we’ll look into it. And, Madam Secretary, I just wanted to ask you about the $7 trillion budget that the president just put forward? Is there any part of this proposal that needs to be kept?


Well, look, you know, this is a budget that invests in our economy in ways that will strengthen 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’s paying off 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 corporations 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’ve been told you’re short on time, and I’ll have to leave it at that. Thank you for your work, and your time this morning.

SECRETARY YELLEN: Thank you very much, Margaret.

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