NEW DELHI/NEW YORK: The Federal Deposit Insurance Corporation seized the assets of Silicon Valley Bank on Friday, marking the largest bank failure since Washington Mutual during the height of the 2008 financial crisis.
The bank failed after depositors, mostly technology workers, and venture capital-backed companies began withdrawing their money, creating a run on the bank. FDIC said that depositors will have access to their insured deposits – capped at $250,000 – by Monday (March 13).
Silicon Valley was heavily exposed to tech industry and there is little chance of contagion in the banking sector as there was in the months leading up to the Great Recession more than a decade ago. Major banks have sufficient capital to avoid a similar situation.
The FDIC ordered the closure of Silicon Valley Bank and immediately took position of all deposits at the bank Friday. The bank had $209 billion in assets and $175.4 billion in deposits at the time of failure, the FDIC said in a statement. It was unclear how much of the deposits were above the $250,000 insurance limit at the moment.
However, data submitted to the FDIC by the bank at the end of 2022 showed that 89 per cent of its $175 billion in deposits were uninsured.
Notably, the FDIC did not announce a buyer of Silicon Valley’s assets, which is typically when there’s an orderly wind down of a bank. The FDIC also seized the bank’s assets in the middle of the business day, a sign of how dire the situation had become.
This story is from the March 12, 2023 edition of Millennium Post Delhi.
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This story is from the March 12, 2023 edition of Millennium Post Delhi.
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