Tag Archives: U.S. Department of Commerce

US Treasury Secretary Janet Yellen Spoke About SVB

CNBC News posted a transcript of Treasury Secretary Janet Yellen on “Face The Nation”. Secretary Yellen spoke with Margaret Brennan. From the transcript:

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’s 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, its 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 the situation. I can’t really provide further details at this time. But what I do want to emphasize is that the American banking system is really safe and well-capitalized, it’s resilient.

In the aftermath of the 2008 financial crisis. New 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 baking system.

Margaret Brennan: …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?

Treasury Secretary Janet 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…

Financial Times reported some comments made by various people regarding SVB’s problems. Mitt Romney, the Republican senator from Utah, said depositors should “recover and have access to their deposits in order to meet their payrolls, pay their suppliers, and to prevent contagion.”

Andrew Yang, an entrepreneur and former Democratic presidential candidate, warned that “thousands of companies will fold or lay people off next week because of lack of access to accounts through no fault of their own”, and imploring the Treasury or the state of California to intervene.

Billionaire hedge fund investor Bill Ackerman issued one of the most urgent calls on Saturday, working of a run on all but the biggest banks should the government stop short of guaranteeing all of SVB’s deposits or the lender being acquired by JPMorgan, Citigroup, or Bank of America.

Politico reported that Rep. Josh Gottheimer’s office on Sunday began circulating a letter among lawmakers urging the FDIC, along with the Federal Reserve, Treasury and Office of the Comptroller of the Currency, to take steps to calm markets and offer SVB’s customers clarity.

The letter calls on the FDIC to identify a buyer for the failed bank, and asks the Federal Reserve and Treasury to encourage banks that have relationships with SVB depositors to extend emergency lines of credit to clients that need assistance covering essential costs.

The interesting thing about this situation, in my opinion, is that it certainly looks as though SVB is not going to get a bailout. That’s remarkably different than how failed banks were treated back in 2008.

U.S. Commerce Department Tightens Exports of Hacking Tools

The U.S. Commerce Department’s Bureau of Industry and Security (BIS) has released an interim final rule that establishes controls on the export, reexport, or transfer (in-country) of certain items that can be used for malicious cyber activities.

Here is a key part of the press release:

The United States Government opposes the misuse of technology to abuse human rights or conduct other malicious cyber activities, and these new rules will help ensure that U.S. companies are not fueling authoritarian practices. U.S. exporters are likewise encouraged to consult the State Department’s Guidance in Implementing the “Guiding Principles” for Transactions Linked to Foreign Government End Users for Products or Services with Surveillance Capabilities to minimize the risk that their products or services are misused by governments to violate or abuse human rights.

The Washington Post eported that this was a long-awaited rule that officials hope will stem the export or resale of hacking tools to China and Russia while still enabling cybersecurity collaboration across borders.

The rule will take effect after 90 days. Here is what it covers:

  • Software such as Pegasus, a potent spyware product sold by the Israeli firm NGO Group to governments that have used it to spy on dissidents and journalists
  • Bars sales of hacking software and equipment to China and Russia, as well as to a number of other countries of concern, without a license from the department’s Bureau of Industry and Security (BIS)

According to The Washington Post, The U.S. Department of Commerce already has export controls on products containing encryption, so the new rule applies to products that do not contain encryption. The Washington Post also reported that any intrusion software, even for defensive purposes, being sold to anyone in China or Russia, whether or not they work for the government, will require a license, according to the rule.

In addition, the rule will align the United States with the 42 European and other allies that are members of the Wassennaar Arrangement. This group sets voluntary export control policies on military and dual-use technologies (products that can be used both for civilian ad military purposes).

The Washington Post says that China is not a Wassenaar member. Israel is also not a member but voluntarily adopts its controls. Russia is a Wassenaar member.

In my opinion, the rule seems like a common-sense idea. There is no good reason to sell, transfer, or export tools to other countries that might be inclined to use those tools to hurt people.