Today California regulators shut down Silicon Valley Bank, a troubled institution that provided funding to technology startups throughout the United States.
Silicon Valley Bank was the country’s 16th largest before regulators shut it down today in a move that came after the bank saw many of its customers withdraw their funds, and a troubled attempt by the institution to raise capital by selling bonds.
Account holders were informed today that the bank had been seized, and the Federal Deposit Insurance Corporation appointed as its receiver. Those with money in the bank were told to expect their funds back “no later” than Monday, according to Yahoo! Finance. The bank apparently had $175.4 billion in deposits and $209 billion in assets at the time it was shut down by regulators.
However, the same outlet reports that around “87% of Silicon Valley Bank’s deposits were uninsured as of December of 2022,” and those depositors will be given an “advance dividend within the next week and a receivership certificate for the remaining out of their uninsured funds,” according to the FDIC.
The sudden end of Silicon Valley Bank marks the biggest financial institution to fail since the 2008 financial crisis, and has even left wing outlets noting that the event “has echoes of 2008.”
Billionaire hedge fund manager Bill Ackman compared the bank’s fate to that of Bear Stearns, reported CNN, which was the first bank to collapse during the last crisis.
— Bill Ackman (@BillAckman) March 10, 2023
Still, others have cautioned that the fate of Silicon Valley Bank does not necessarily portend doom for other lending institutions or Western economies, as the Bear Stearns did in the 2000s.
“The reason [SVB is] in trouble is because they have exposure to particular industries,” economist Jonas Goltermann told the left wing website. He added that other banks protect themselves by being more “diversified” in their investments and lending.
Regardless, the banking sector appears to be feeling the effects of the shutdown. Stock prices for JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup were all down between 4% and 7% on Thursday, reports CNN, which adds that though they stabilized Friday, regional banks have continued to suffer.
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