Does anyone have any hard numbers on the risk of potential contagion in the banking sector? This is a rather large institution to go bust, and there is some discussion that a large percentage of their portfolio is composed of members that are over the FDIC limit. I also don't know how the Treasury mismatch can be solved - do you just tell creditors to wait for the maturity of the 10 year bonds to withdraw their funds and eat inflation when moving the assets to the Santa Clara bank? Ideally, if there is no risk of contagion to the larger financial system all of these firms can take a hike, but I don't know if that's known a priori. Yellen is just saying "we're not going to do that," but it would be helpful if there were some hard numbers or other reassurance that they know that the larger economy won't be affected (outside of these firms going bust for poor asset management).

EDIT -

From the WSJ (https://archive.ph/HZ29y)

"

A plan that soothes nerves about access to uninsured deposits—most of the bank’s deposits are sizable enough that they don’t carry Federal Deposit Insurance Corp. protection—could tamp down the crisis and limit any impact on the economy as the Federal Reserve focuses on combating inflation by raising interest rates.

But failing to swiftly clarify how SVB’s customers can access funds, make payroll and conduct business risks broader economic consequences and threatens to complicate the Fed’s monetary policy decisions.

“We want to make sure that the troubles that exist at one bank don’t create contagion to others that are sound,” Treasury Secretary Janet Yellen said in an interview on Face the Nation on CBS Sunday. “We are concerned about depositors and are focused on trying to meet their needs.”

Ms. Yellen declined to provide details on what federal policymakers are considering.

"

In other words, it doesn't look like we know anything yet.

This is the statement from the Financial Times article -

“Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out . . . and the reforms that have been put in place means we are not going to do that again,” Yellen said.
“But we are concerned about depositors, and we’re focused on trying to meet their needs.”

And from here - https://www.fastcompany.com/90864111/silicon-valley-bank-svb...

"

The FDIC ordered the closure of Silicon Valley Bank and immediately took position (sic - possession) of all deposits at the bank Friday. The bank had $209 billion in assets and $175.4 billion in deposits at the time of failure, the FDIC said in a statement. It was unclear how much of deposits was above the $250,000 insurance limit at the moment.

"

Unless SVB had over 700,000 customers, quite clearly there is a mismatch between insured and uninsured customers.

So by Yellen saying “But we are concerned about depositors, and we’re focused on trying to meet their needs.” and at the same time saying there won't be a bailout she's effectively saying nothing. In this case those things are synonymous.

Until there are hard numbers on possible contagion and the steps that the Federal government is going to take to prevent that we won't know anything for sure.

FYI - Here's the transcript of the interview with Janet Yellen on Face the Nation - https://www.cbsnews.com/news/janet-yellen-face-the-nation-tr...