The US Federal Reserve has bailed out the Silicon Valley Bank (SVB), which had collapsed over the weekend, reports Sky News.
Department of Treasury, Federal Reserve, and Federal Deposit Insurance Corporation released a joint statement saying “Depositors in SVB will have access to all of their money starting Monday, March 13. No losses associated with the resolution of the Silicon Valley Bank (SVB) will be borne by the taxpayer."
Silicon Valley Bank collapsed earlier on Friday morning after a stunning 48 hours in which a bank run and a capital crisis led to the second-largest failure of a financial institution in US history. California regulators closed down SVB and put it under the control of the US Federal Deposit Insurance Corporation.
The tensions arose on Wednesday when SVB announced it had sold a bunch of securities at a loss and that it would sell $2.25 billion in new shares to shore up its balance sheet. That triggered panic among key venture capital firms, who reportedly companies to withdraw their money from the bank.
The company’s stock plummeted on Thursday, dragging other banks down with it. By Friday morning, SVB’s shares were halted and it had abandoned efforts to quickly raise capital or find a buyer. Several other bank stocks were temporarily halted Friday, including First Republic, PacWest Bancorp, and Signature Bank.
Deputy Treasury Secretary Wally Adeyemo on Friday sought to reassure the public about the health of the banking system after the sudden collapse of SVB.
“We have the tools that are necessary to [deal with] incidents like what’s happened to Silicon Valley Bank,” Adeyemo said.
Comments (0)