Regulators Shut Down Major Tech Bank After Run On Savings | Eastern North Carolina Now

Silicon Valley Bank collapsed after customers sought to withdraw funds due to the company’s lackluster balance sheet and overall difficulties in the startup sector.

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    Publisher's Note: This post appears here courtesy of the The Daily Wire. The author of this post is Ben Zeisloft.

    Silicon Valley Bank collapsed after customers sought to withdraw funds due to the company's lackluster balance sheet and overall difficulties in the startup sector.

    SVB announced a $1.75 billion share sale on Wednesday after the company suffered heavy losses from the liquidation of a $21 billion bond portfolio, raising concerns among venture capital firms and startups with ties to the company about the safety of their assets. SVB, the 16th largest bank in the United States and the largest in Silicon Valley, lends to nearly half of publicly traded venture-backed technology and healthcare companies.

    The Federal Deposit Insurance Corporation said on Friday that SVB was closed by the California Department of Financial Protection and Innovation. Insured depositors will have access to funds by Monday morning, according to a press release from the government-backed firm, while uninsured depositors can expect an advance dividend in the next week.

    "At the time of closing, the amount of deposits in excess of the insurance limits was undetermined," the entity said. "The amount of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers."

    The implosion of SVB would mark the largest bank failure since Washington Mutual collapsed in late 2008, according to Axios.

    Startups have been especially pressed for funds amid the macroeconomic turmoil that has marked the past several months, introducing additional financial pressures for the company. SVB Financial Group CEO Gregory Becker previously said in a letter to investors that "client cash burn has remained elevated and increased further in February, resulting in lower deposits than forecasted," according to a report from Reuters.

    Shares for SVB declined more than 60% this week before authorities halted trading for the company's stock on Friday morning. Shares for First Republic Bank have also declined more than 23% this week, while shares for JPMorgan Chase and Bank of America declined 6% and 10% respectively as investors worry about contagion in the broader financial sector.

    SVB told multiple clients on Thursday that wire transfers could be delayed, while the company's customer support services were largely unavailable, according to a report from The Information. One founder was told by a customer support agent that "systems are down" and "wires are backed up," although others were able to withdraw funds.

    SVB maintains some $209 billion in consolidated assets, according to data from the Federal Reserve. Venture capital firms such Founders Fund, Coatue Management, Union Square Ventures, and Founders Collective exhorted portfolio companies to remove their assets, according to a report from Bloomberg, while Sequoia Capital reiterated its diversification policy.

    Becker told clients to "stay calm" during a brief call with investors on Thursday afternoon.

    Pershing Square Capital Management CEO Bill Ackman had said on Thursday that the federal government should consider offering a bailout package to SVB. He asserted that the failure of the company could "destroy an important long-term driver of the economy" and suggested that "the dominoes" may "continue to fall" if other banks face sudden demand for withdrawals.

    The administrations of former President George W. Bush and former President Barack Obama previously introduced government bailouts for commercial and investment banks during the Great Recession, during which financial institutions were overexposed to subprime mortgages.
poll#164
It has been far too many years since the Woke theology interlaced its canons within the fabric of the Indoctrination Realm, so it is nigh time to ask: Does this Representative Republic continue, as a functioning society of a self-governed people, by contending with the unusual, self absorbed dictates of the Woke, and their vast array of Victimhood scenarios?
  Yes, the Religion of Woke must continue; there are so many groups of underprivileged, underserved, a direct result of unrelenting Inequity; they deserve everything.
  No; the Woke fools must be toppled from their self-anointed pedestal; a functioning society of a good Constitutional people cannot withstand this level of "existential" favoritism as it exists now.
  I just observe; with this thoughtful observation: What will happen "when the Vikings are breeching our walls;" how do the Woke react?
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