Former Treasury Secretary Lawrence Summers speaks about Silicon Valley Bank
The collapse of Silicon Valley Bank (SVB) could have severe consequences for the innovation sector of the US economy, according to former Treasury Secretary Lawrence Summers.
Speaking on Bloomberg Television’s “Wall Street Week” with David Westin, Summers warned that the situation must be worked through to avoid serious implications for the venture sector. Regulators recently stepped in and seized SVB after it failed to raise capital and experienced a cash exodus from tech startups that had supported its growth.
The lender had invested the tens of billions of dollars it received from venture-capital-backed startups into longer-term bonds, resulting in significant losses. Summers stressed the need for regulators to contain the problem and possible contagion.
He also warned against blocking mergers that could ultimately lead to financial stability out of fear of consolidation.
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