Federal officials faced growing pressure Saturday to bail out even the biggest customers of the collapsed Silicon Valley Bank, igniting a ferocious political debate over Washington’s role in tamping down potential threats to the broader U.S. financial sector.
Tech executives, former government officials and at least two Democratic lawmakers called for safeguarding depositors with money at stake in the collapse if a buyer for the bank’s assets isn’t found by Monday, arguing that it’s the only way to limit a cascade of bigger problems.
Companies that did business with Silicon Valley Bank are already warning that the bank’s failure may force thousands of layoffs or furloughs, and prevent many workers from receiving their next paycheck.
Some experts worry that large numbers of companies could move to transfer their money from regional banks similar to SVB to safer giant commercial banks Monday, leading to a fresh round of destabilization.
That could lead to a backlash, in an echo of the fury directed at government rescue measures for Wall Street during the 2008 financial crisis. But this time taxpayers would be bailing out the would-be lords of tech rather than the lords of finance.