Summers: Impact of SVB Collapse ‘Will Be Quite Severe for our Innovation System’ Unless Government Can Ensure Payrolls Are Met 

During an interview broadcast on Friday’s edition of Bloomberg’s “Wall Street Week,” a Harvard professor, economist, director of the National Economic Council under President Barack Obama, and Treasury Secretary under President Bill Clinton Larry Summers stated that unless the situation is sorted out, The collapse of Silicon Valley Bank (SVB) is certain to have very dire consequences for Silicon Valley and for the entire enterprise sector economy, which has been dynamic, and he said the government must ensure that companies with unsecured deposits they were relying on to meet payroll can do so. Otherwise, “the consequences for our innovation system will be very dire.”

“I don’t think this is likely to be a systemic problem on a large scale,” Summers said, “but it would certainly have very dire consequences for Silicon Valley and for the entire enterprise sector economy, which has been dynamic, unless the government is able to make sure that this The situation is being worked on.”

He added that “there are dozens, if not hundreds of startups” who were planning to use unsecured deposits “to pay their salaries next week. If that is not possible, the consequences will be very dire for our innovation system. I suspect that ways will be found to provide advances.” Big at least on those deposits to enable the payroll to be paid. I think the FDIC is going to have to think very carefully about how to be as creative as possible in using its powers to make sure that this doesn’t have a bunch of collateral consequences for the innovation economy. I don’t think That this is the time for moral hazard lectures or to talk about teaching people lessons. We have enough pressures and challenges in the economy without adding the collateral consequences of a collapse in an important sector of the economy.”