By Bay City News.
Gov. Gavin Newsom is working with “the highest levels of leadership” at the White House and the U.S. Treasury to stabilize Silicon Valley Bank as quickly as possible, the governor said in a statement Saturday morning.
A run on Santa Clara-based Silicon Valley Bank with billions in deposits prompted state regulators at the California Department of Financial Protection and Innovation to shut it down Friday. In response, the Federal Deposit Insurance Corporation (FDIC) was appointed receiver of the bank.
"Over the past 48 hours, I have been in contact with the highest levels of leadership at the White House and Treasury," Newsom said.
“Everyone is working with the FDIC to stabilize the situation as quickly as possible, to protect jobs, people’s livelihoods, and the entire innovation ecosystem that has served as a tent for our economy,” he added in a brief statement.
Forbes named the bank one of America's best banks last year.
Investors and depositors tried to withdraw $42 billion in deposits on Thursday. That left the bank with a negative cash balance of nearly $1 billion on Thursday, according to court documents.
The run on the bank left it “unable to pay its obligations when due, and the bank is now insolvent,” officials with the California Department of Financial Protection and Innovation said in an order seizing the bank and its business.
The bank was in a strong financial position on Wednesday, but that day it sold U.S. Treasury bonds and mortgage-backed securities and suffered a loss of $1.8 billion. That's what prompted customers to try to get their money before they couldn't.
Silicon Valley Bank has 17 branches in California and Massachusetts. It had more than $175 billion in deposits and $209 billion in assets at the end of the year.
By comparison, Washington Mutual had $1T4T307 billion in assets when it failed in September 2008. Washington Mutual and a subsidiary had combined deposits of $188 billion when JP Morgan Chase bought it that year.
Regulators at the Federal Deposit Insurance Corporation, which insures deposits of up to $250,000 for member institutions, said Friday that all insured depositors will have access to their insured deposits by Monday at the latest.
State regulators have appointed the FDIC as receiver for Silicon Valley Bank to ensure that insured customers have access to their money. Banking activities at Silicon Valley Bank will resume no later than Monday. That includes online services, federal officials said.
Federal regulators did not know as of Friday morning how much money Silicon Valley Bank had in uninsured deposits, but regulators will determine that amount when they get more information from the bank and its customers.
Customers with more than $250,000 in deposits at Silicon Valley Bank should contact the FDIC at (866) 799-0959. Customers with Silicon Valley Bank loans should continue making payments.
Silicon Valley Bank is the first FDIC-insured institution to fail in 2023.
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