After Silicon Valley Bank (SVB) experienced financial turmoil, the US Federal Deposit Insurance Corporation (FDIC) and the California Department of Financial Protection and Innovation closed the financial institution. Insured depositors can withdraw their funds on Monday after the FDIC took over the failed bank.
Federally Insured Depositors To Withdraw Funds Monday, Uncertainty Hangs Over Depositors With Accounts Over $250K
On Friday, US regulators closed Silicon Valley Bank (SVB) following a significant drop in the company’s share value and reports of a bank run on deposits. SVB’s shares were halted on Nasdaq and rumors began to spread that the bank was looking for a buyer. Shortly thereafter, the California Department of Financial Protection and Innovation and the FDIC shut down SVB.
The FDIC announced that federally insured depositors, up to $250,000, can withdraw their funds on Monday. It is unclear how the bank will handle the larger deposits. “At the time of closing, the FDIC as receiver immediately transferred all insured deposits from Silicon Valley Bank to DINB,” the agency explained Friday. Depositors with accounts exceeding $250,000 may contact the FDIC to seek resolution.
The regulator noted that, as of the end of 2022, SVB had $209 billion in assets and $175.4 billion in deposits. “At the time of closing, the amount of deposits in excess of insurance limits was not determined,” the FDIC statement warned. “The amount of uninsured deposits will be determined once the FDIC obtains additional information from the bank and its customers.”
The failure of Silicon Valley Bank is one of the largest bank failures in the United States since the bankruptcy of Washington Mutual (Wamu). SVB’s failure comes shortly after the liquidation announcement of Silvergate Bank, a crypto-friendly financial institution that said it was winding down operations.
What do you think the closure of Silicon Valley Bank and the recent liquidation announcement of Silvergate Bank say about the state of the banking industry? Share your thoughts on this topic in the comments section below.
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