The downfall of Silicon Valley Bank has reached every part of the world. As the masses grew weary of the possible repercussions of this collapse, the U.S. government was trying to bring in some respite. The U.S. Federal Deposit Insurance Corp [FDIC], an agency set up to shield bank depositors, during bank failures has been stepping up to fix the situation.
On March 11, the FDIC tried to sell the bank in an auction just a day after it collapsed. But the auction barely saw bids from prominent banks in the country. This could have been because the bids were open for a brief period of time. Nevertheless, an offer did come in from a financial institution, which the FDIC rejected. Now, the agency was all set to roll out another auction to sell Silicon Valley Bank.
However, the second auction has not been scheduled yet. Despite this, the upcoming auction could be quite different and even favorable for an array of reasons. Senate Republicans were informed by FDIC officials that, they had more freedom to sell the company at the moment. This was because regulators had determined that its failure posed a threat to the financial system.
Reports claim that since SVB has been deemed “systemic,” the FDIC is now free to provide incentives to prospective buyers of the company, including loss-sharing arrangements.
Silicon Valley Bank ‘conducts business as usual’
Amidst the auction process, FDIC brought in Tim Mayopoulos as the new CEO of SVB. In his letter to the bank depositors, he affirmed that business was being conducted as usual. In addition, cross-bored transactions were also expected to be resumed shortly.
Mayopoulos further wrote in the letter,
“I look forward to getting to know the clients of Silicon Valley Bank…I also come to this role with experience in these kinds of situations. I was part of the new leadership team that joined Fannie Mae in the wake of the financial crisis in 2008-09, and I served as the CEO of Fannie Mae from 2012-18.”