OAN Roy Francis
UPDATED 1:31 PM – Friday, March 10, 2023
The California Department of Financial Protection and Innovation has said that it is taking over the Silicon Valley Bank (SVB).
The Federal Deposit Insurance Corporation (FDIC), which will be the receiver, has established a separate entity where all insured deposit that were made at SVB will be available by Monday.
SVB deposits are insured up to $250,000 per depositor, as with all other FDIC-member banks. However, the FDIC has yet to determine how many of the deposits at the bank exceed the limit. The agency stated that they “will be working over the weekend” to figure out the exact figures, although initial numbers suggest that over 97.3% of the deposits at the bank are over the insured limit.
The closure of SVB is the biggest failure of a bank since the Washington Mutual collapse amidst the 2008 financial crisis. According to FDIC data, SVB, the 16th largest bank in the nation, had over $209 billion in assets and more than $175 billion in deposits as recently as December.
Trouble for the Santa Clara, California based bank started earlier this week when it had announced that it had sold around $21 billion of securities and was debating on offering over $1 billion worth of shares in order to fundraise for “general corporate purposes.”
The announcement had raised concerns among investors, and depositors who started to wonder if their deposits were safe with the bank.
The shutdown of the bank comes as its shares have fallen more than 60% on Thursday, followed by a double digit drop on Friday morning before the markets have even opened. Trading of its shares was then halted. Shares of other banks had dropped as well as news of SVB broke, including First Republic Bank, PacWest Bancorp, and Western Alliance Bancorporation.
Treasury Secretary Janet Yellen told House lawmakers on Friday morning that she is “monitoring” recent developments which should cause worry for the economy.
“There are recent developments that concern a few banks that I’m monitoring very carefully,” she said. “And when banks experience financial loss it is and should be a matter of concern.”
SVB is known for being the bank of West Coast companies in the tech industry, many of which are startups. The tech industry has recently taken a huge blow due to economic slowdown and high interest rates.
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