Treasury Secretary Janet Yellen said the SVB collapse is 'very different' from the 2008 crisis and that the financial system is 'significantly stronger than it was 15 years ago'
After the abrupt closure and failure of Silicon Valley Bank, along with Signature Bank, some worried about history repeating itself. But Treasury Secretary Janet Yellen doesn't think that 2023 is a 2008 redux.
One key driver of the Great Recession was mortgage lenders' willingness to lend to potential homebuyers, even those who might not necessarily be financially equipped to pay off those homes. That meant they lent out what's calledto wannabe homebuyers with lower credit, helping set off rapidly rising home prices and a housing bubble — and setting up the new homeowners to not be able to make their mortgage payments.
"To this day I always argue with people, the problem was the housing bubble. The financial crisis made it worse, no doubt about it," Baker added."But the real problem was that the housing market was driving the economy — a housing bubble, and it collapsed, and there was no easy replacement for that. It's not that story at all."
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