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Sillicon Valley bank seized by FDIC | FDIC issued a closure order for SV bank | Silicon Valley is sizable institution


Silicon Valley bank seized by FDIC

The assets of Silicon Valley Bank were seized by the Federal Deposit Insurance Corporation on Friday, making it the biggest bank failure since Washington Mutual failed at the height of the financial crisis in 2008.

The bank fell as a result of a run on the bank, which was started by depositors who were primarily technology workers and venture capital-backed businesses.

FDIC issued a closure order for SV bank

On Friday, the FDIC issued a closure order for Silicon Valley Bank and immediately seized all deposits in the institution. At the time of bankruptcy, the bank had $175.4 billion in deposits and $209 billion in assets, according to a statement from the FDIC. It wasn’t immediately clear how much of the deposits exceeded the $250,000 insurance cap.

It is noteworthy that the FDIC did not reveal a buyer for Silicon Valley’s assets, as is customary when a bank is being properly wound down. In a sign of how bad things had gotten, the FDIC also took the bank’s assets in the midst of the work day.

Silicon Valley is sizable institution

Silicon Valley Bank is a sizable institution—the it’s 16th-largest bank in the nation. It serves as a significant financial channel for venture capital (VC)-backed businesses, which have been severely impacted over the past 18 months as a result of the Federal Reserve’s increase in interest rates and decrease in investor interest in riskier digital assets.

According to reports, Silicon Valley Bank urged VC-backed companies to withdraw enough “burn” cash to cover their expenses for at least two months. Since most VC-backed businesses are not profitable, investors frequently pay close attention to a company’s “burn rate,” or how rapidly it spends the money it needs to operate.

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