Silicon Valley Bank is shut down by regulators, FDIC to protect insured deposits

CNBC ^ | March 10, 2023 | Jesse Pound

[PJ-Comix]

Silicon Valley Bank has been closed by regulators, which have taken control of the bank’s deposits, the Federal Deposit Insurance Corporation announced Friday.

The California Department of Financial protection and Innovation closed SVB, and named the Federal Deoposit Insurace Corporation as the receiver.

The FDIC has created the Deposit Insurance National Bank of Santa Clara, which now holds the insured deposits from SVB.

[House Atreides]

“ The FDIC insurance cap is almost always waived for individual depositors. As a matter of policy, my guess is that it will also be waived for corporate depositors in this instance because of the economic and political importance of venture capital.”
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Thanks, I didn’t know that. Why even have an insurance “cap”?

[WildHighlander57]

ping jockey wrote:

“
Looks like JP Morgan/Chase, UBS, Bank Anti-America are some that are fixing to take a powder.
“

How are those 3 connected to SVB and the 10 banks EBH mentioned?

[NautiNurse]

I heard most customers had over $250,000 in Deposits

SVB said it estimates that at the end of 2022 the amount of deposits in its U.S. offices that exceed the FDIC insurance limit was $151.5 billion.

Is it safe to presume the SVB is one of the many banks that haven't been paying squat for interest on deposits? Plenty of us have been moving our hard earned money to institutions which appreciate customers by paying fair interest.

[Rockingham]

The cap would likely be applied if the FDIC had to as a matter of keeping solvent in a wide scale emergency. Otherwise, the cap helps encourage depositors to hedge the risk by spreading their deposits about so as to keep under the cap in any one institution.

[Alberta's Child]

The more I look at those numbers, the less sense they make. The authors may be wrong about something here. Did mortgage rates ever get so low that the AVERAGE yield on a mortgage-backed security would be only 1.56%?

I’m thinking these are Treasury bills, not mortgage bonds.

[vivenne]

I think the worst of it will hit during the primaries and will benefit Trump.

[Sarah Barracuda]

ROKU just disclosed they had their money at Silicon Valley Bank, business accounts are NOT FDIC insured?

[GOPJ]

Over 90% of the money in that bank was NOT insured.

[dynachrome]

From yahoo:

“At the end of 2022, SVB had uninsured deposits in its US offices of $151.5 billion, versus total deposits of $173 billion. That’s 88% of all SVB deposits that didn’t have FDIC insurance.”

[V1Rotate]

All I know is I went to bed last night pretty much broke and I woke up this morning with most of it left.

[bobcat62]

If these startups are doomed, they can fly the Ukrainian flag for funding.

[Vermont Lt]

Treasuries are doing way, way better than 1.5%.

[Alberta's Child]

NOW they are. But how about any Treasuries that SVB purchased in 2021, 2020, 2019, etc.?

[grey_whiskers]

[MeganC]

Insured deposits are only insured to $250,000.

That’s all.

Most of the SVB depositors are going to take a hit. A big one.

[rollo tomasi]

Hold on, is that $80 billion in MBS at 1.5ish? I thought their portfolio was a lot less than that. Where were the risk/strategic management attorneys at to temper business majors addicted to that sweet “free money”/”credit”/repo train?

[fhayek]

Okay, here's my go to reference point. If you are not familiar with Patrick Boyle, you should be. Boyle not only explains it well, but his dry sense of humor is epic. Bank Runs! What's Going On?

Spoiler alert. It involves Crypto.

[Brass Lamp]

If it can be proven that the FDIC incurred undue expense because of recent account-holder membership, perhaps the Feds can FINALLY go after Jim Cramer.

[PAR35]

That agency has set up a Deposit Insurance National Bank, so they will manage the assets of the failed bank.

If by 'they' you mean the FDIC as Receiver and not the DINB, I believe that to be correct. It appears that all that passed to the DINB were the insured deposits. The press release did say that an advance dividend would also be paid on the uninsured deposits, with a Receiver's Certificate for the balance of the unisured deposits.

My guess is that they did a DINB because it happened too fast to do anything else. Before it closed this morning, I thought they would do it at close of business today - I don't recall any going back into the 80s with a morning closing, there were a few where they closed a couple of hours before closing time. I also guessed wrong, I thought they would do a Bridge Bank. I was able to only find one other DINB (Citizens State Bank, New Baltimore Michigan (just before Christmas, 2009).

[grey_whiskers]

JUST IN: President and CEO of collapsed Silicon Valley Bank Greg Becker was a Class A director at the San Francisco Federal Reserve, Reuters reports.— Watcher.Guru (@WatcherGuru) March 11, 2023

BREAKING: Circle confirms $3.3 billion of the ~$40 billion $USDC reserves are in collapsed Silicon Valley Bank.— Watcher.Guru (@WatcherGuru) March 11, 2023