After Silicon Valley Bank (SVB) experienced financial turmoil, the U.S. 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 on Monday, Uncertainty Looms for Depositors With Accounts Exceeding $250K
On Friday, U.S. regulators closed Silicon Valley Bank (SVB) following a significant drop in the firm’s stock 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 seeking a buyer. Shortly thereafter, the California Department of Financial Protection and Innovation and the FDIC shut SVB down.
The FDIC announced that federally insured depositors, up to $250,000, can withdraw their funds on Monday. It is uncertain how the bank will handle larger deposits. “At the time of closing, the FDIC as the receiver immediately transferred all insured deposits of Silicon Valley Bank to the DINB,” the agency explained on Friday. Depositors with accounts exceeding $250,000 can contact the FDIC to seek a 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 exceeding the insurance limits was undetermined,” the FDIC statement cautioned. “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 by 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 by Silvergate Bank say about the state of the banking industry? Share your thoughts about this subject in the comments section below.