Posted on 03/11/23
| News Source: FOX Business
The Federal Deposit Insurance Corporation (FDIC) says it has seized control of Silicon Valley Bank (SVB), confirming the lender was shut down by California regulators amid a run on the bank.
The FDIC said in a press release that SVB was closed on Friday by the California Department of Financial Protection and Innovation, which in turn appointed FDIC as the receiver of all insured deposits of the bank.
SVB, which caters to the venture capital community, had 17 branches in California and Massachusetts. It was the 16th-largest bank in the U.S., and has been considered a go-to for startups for decades.
This is the second-largest bank to close in the U.S. since 2008.
Earlier this week, SVB disclosed mounting losses, and shares plummeted more than 60% before being halted. The bank was in the middle of a liquidity crisis after announcing plans for a $1.25 billion stock sale with little interest.
Ahead of SVB's closure, billionaire hedge fund manager Bill Ackman floated the idea of a government bailout for the bank in a tweet saying, "The failure of @SVB_Financial could destroy an important long-term driver of the economy as VC-backed companies rely on SVB for loans and holding their operating cash. If private capital can’t provide a solution, a highly dilutive gov’t preferred bailout should be considered."