The announcement was celebrated by the market as the collapse of Silicon Valley could leave many investors and startups without money
After announcing that he would save the Silicon Valley Bankthe US government went there and saved the Silicon Valley Bank. In a joint statement from the Secretary of the Treasury, the Chairman of the Federal Reserve and the FDIC, the government has just announced the definitive closure of the bank’s operations with the full return of all assets held by the institution’s account holders. The announcement was celebrated by the market as the possibility of investors and startups running out of money with the bankruptcy of the institution haunted everyone since Thursday. “Everyone is asleep today,” said one executive.
“Today we are taking decisive action to protect the US economy by strengthening public confidence in our banking system. This step will ensure that the US banking system continues to fulfill its vital roles of protecting deposits and providing access to housing credit and businesses in a way that promotes sustainable economic growth,” the statement said.
The material states that after receiving recommendations from the FDIC and the Federal Reserve, and in consultation with the President, Treasury Secretary Janet Yellen has approved actions to complete the SVB shutdown so as to fully protect her clients. “Depositors will have access to all their money from the morning of Monday, March 13,” the material reads. The only ones not to be “saved” will be the shareholders and holders of some of the bank’s debt securities. The institution’s leadership will also be left out.
The material does not clarify what was agreed for the payments. What is known is that the government had been negotiating with other institutions to sell assets since svb. According to the government, citizens will not be burdened with repayment of bank resources. The account of any losses related to the payment to those who had assets in excess of the limit set by the FIDC (up to US$250,000) will be divided through an allotment between the banks.
The US government’s rush to fix the situation was closely linked to the risk that companies would run out of cash to pay their employees’ salaries next 15, when many make the mid-month adjustment. There was also a huge fear of contamination of the whole market due to the crisis of confidence generated by the violation of the SVB.
In this regard, in the statement on the startup bank, the government took the opportunity to talk about the closure of Signature Bank, the 29th largest bank in the US, which underwent intervention over the weekend. Is it a short blanket calling? But at least the VCs and startups’ money is safe.
Who pays the bill?
Despite the government saying taxpayers will not be left with the bill for the closure of the svb, in the end, are those: there is no free lunch. At some point a new rate will be created to compensate for this joke.
The question now is whether there will be one or more buyers for the SVB’s operations, and who will fill the vacuum left by the institution in the technology sector.
At least the recession is now running at a normal pace, as one founder put it. And you can already spend the money buying champagne to celebrate another day of survival.
Source: Terra
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