Silicon Valley Bank declared bankruptcy
To protect insured depositors, the Federal Deposit Insurance Corporation created the Deposit Insurance National Bank (DINB). Upon the closure of Silicon Valley Bank, the Federal Deposit Insurance Corporation, as receiver, was required to immediately transfer all insured deposits of Silicon Valley Bank to DINB.
US President Joe Biden spoke Monday with California Governor Gavin Newsom about the collapse of a Silicon Valley bank, the White House said, Reuters reported Tuesday. The White House statement noted that "President [Biden] and the governor of California spoke about Silicon Valley banks and efforts to address the situation," but gave no further details of the meeting.
In the latest development, on March 12 local time, the Federal Reserve, the Treasury Department and the FDIC issued a joint statement saying that starting Monday, March 13, depositors can withdraw all of their money. Any losses related to the failure of Silicon Valley Bank will not be borne by taxpayers.
Headquartered in Santa Clara, California, with 17 branches in California and Massachusetts, Silicon Valley Bank had total assets of about $209 billion and total deposits of about $175.4 billion at the end of 2022, according to public filings.
As the 16th largest bank in the United States, Silicon Valley Bank is a major financial conduit between the tech industry, start-ups and tech workers, according to the Associated Press. But it is precisely the connection to the tech industry that is adding to its troubles. Tech stocks have been hammered over the past 18 months, as the industry has shed jobs and venture capital funding has been declining.
At the same time, the bank has been hit hard by the Federal Reserve's fight against inflation and a series of aggressive interest rate hikes to cool the economy.