Economy
U.S. regulators promised customers access to deposits in bankrupt SVB
All depositors of bankrupt Silicon Valley Bank (SVB) will be able to get access to their funds from Monday, March 13, according to the joint statement of the U.S. Treasury Department, Federal Reserve and Federal Deposit Insurance Corporation.
New York-based Signature Bank, which was shut down on Sunday, March 12, by the state regulator, will also be affected. It became the third major financial institution to close after the collapse of Silicon Valley Bank (On March 8, the rollback of operations of another cryptocurrency bank, Silvergate Bank, announced the parent company, Silvergate Capital Corporation). Recall that USDC had problems after that.
Regulators reported that U.S. authorities “are taking decisive action to protect the U.S. economy by strengthening public confidence in the banking system.” The Fed, the Treasury Department and the Deposit Insurance Corporation stressed that the U.S. banking system remains resilient “in large part because of reforms implemented since the financial crisis that have provided greater protection for the banking industry.”
In a separate statement, the Fed said it is creating an “Emergency Bank Financing Program” to protect financial institutions affected by the SVB collapse.
Silicon Valley Bank was the largest failed bank in the U.S. in 15 years, since the 2008 crisis. SVB was the 16th largest bank in the country by assets and one of the most prominent lenders to the tech startup industry. On March 12, the Treasury Department announced that authorities would not bail out the bankrupt bank and buy back the defaulted loan obligations from SVB.
The U.S. administration must find a buyer for the bank and remove obstacles to its acquisition. Otherwise, the newspaper wrote, the U.S. banking system will face a crisis. The search for a buyer has become a priority for the Treasury and the Federal Deposit Insurance Corporation.
On March 12, the White House released a statement from President Joe Biden saying that the Treasury and FDIC were working to resolve the SVB problem at the behest of the head of state and their actions would “provide that taxpayer dollars are not at risk. The president also promised to bring those responsible for the SVB bankruptcy situation to justice.
Earlier, we reported that airlines face engine shortages due to air traffic growth.
High-tech startups have been hit. Companies around the world are facing a fight for survival after the collapse of a major US investment bank, Silicon Valley Bank (SVB). There was a “huge disruption” in the industry globally, Bloomberg reported, citing market participants. The entire stock market, and the S&P 500 in particular, plummeted.
Startups under threat
The bankruptcy of the lending institution, in particular, affected the co-founder of startup Birdly Inc. Quang Hoang. The entrepreneur invested about $10 million in SVB and is still unable to repay the money four days after the bank was shut down by the California Department of Financial Protection and Innovation. However, the entrepreneur is far from the only one who has faced similar problems, the article specifies.
“Hoang was one of thousands of founders around the world this week trying to track down their money after days of chaos and who are completely rethinking the way they run their own businesses. Startups from Silicon Valley to London to Tel Aviv to tech hubs across Africa have depended on SVB as a one-stop store for everything from storing their fortunes to personal mortgages,” the story says.
Now investors and technology companies are predicting a complicated financial future for themselves, even if the bankrupt bank begins to attract deposits from customers under a new name. Many market participants faced a “financial payback” for their overreliance on the credit institution’s risky investment assets, the memo said.
On March 11, the California Department of Financial Protection and Innovation closed Silicon Valley Bank, a large investment bank based in Santa Clara County. All insured deposits from SVB were transferred to Deposit Insurance National Bank of Santa Clara. Depositors were expected to have access to their accounts by March 13.
Earlier we reported that the U.S. Department of Justice has begun an investigation into the circumstances of the collapse of Silicon Valley Bank.
The U.S. Justice Department is set to investigate the circumstances surrounding the bankruptcy of Silicon Valley Bank (SVB), which was the largest since the global crisis in 2008. The entire stock market collapsed, in particular the S&P 500. This was reported by The New York Times (NYT), citing two people familiar with the situation.
The sources of the newspaper noted that the investigation is at a very early stage, and it is not yet very clear what the focus of federal investigators and prosecutors will be.
Lawyers believe that the main point that may attract investigators is that a few weeks before the crash of SVB, several top managers sold their shares. The sale of securities brought the sellers millions of dollars.
Market experts pointed out that some top managers sold their shares by previously announced plans, so that such sales would not seem illegal. For this purpose, the date of sale of securities and their volume are chosen in advance. However, some politicians have already said that all of the bank’s top managers should return the money received from the sale of shares.
Earlier on Wednesday, the Wall Street Journal, citing its sources, wrote that creditors of the bankrupt bank SVB joined to make profits after the collapse of the financial institution.
Earlier, we reported that an American billionaire declared the collapse of American capitalism.
Is the collapse of the U.S. economy coming? The Silicon Valley Bank (SVB) bailout package released by American regulators shows that American capitalism is “crumbling before our eyes”. Ken Griffin, founder of the hedge fund Citadel, told The Financial Times.
“There has been a loss of financial discipline because the government bailed out depositors completely. It would have been a great lesson in moral hazard. The loss to depositors would have been insignificant, and it would have increased the importance of risk management,” he said.
In Griffin’s view, the U.S. government should not have taken such drastic action. Griffin’s position contrasts with that of another senior hedge fund manager, Bill Eckman, who on March 13 urged the Federal Deposit Insurance Corporation to “clearly guarantee all deposits now,” warning that “hours matter.”
Eckman wrote on Twitter that “our economy will not function effectively without our community and regional banking system.”
The situation is already affecting the Euro / U.S. Dollar exchange rate.
We previously reported that The Fed announced an emergency bailout of the U.S. banking sector.
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