Answers Are Sort After SVB Collapse
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An editor at Coincrop
13 Mar 2023 | 4 min read
n Friday, US legislators convened with the Federal Reserve and FDIC to examine the abrupt collapse of Silicon Valley Bank (SVB). The representatives posed urgent questions aimed at garnering further insight into this alarming event.
In the wake of SVB's collapse, Democratic US Representative Maxine Waters held meetings with officials from both federal bank regulators and the Treasury Department. Representatives from both major American political parties were in attendance.
"I am alarmed by the failure of Silicon Valley Bank, which marks the second largest bank failure in U.S. history," Waters declared in a statement, noting that she is keeping an eye on and discussing with Committee members the current news about Silicon Valley Bank (SVB) shutting down.
Furthermore, she stated: "I appreciate the DFPI and the FDIC for taking decisive action today, and I remain confident in America’s financial markets and the ability of our regulators to protect consumers and investors."
On March 10, the Federal Deposit Insurance Corporation (FDIC) seized Silicon Valley Bank - one of the most sought-after lenders for tech and growth startups in Silicon Valley. The federal agency then constructed a new bank known as "the Deposit Insurance National Bank of Santa Clara," which now holds SVB's insured deposits. With this takeover, entrepreneurs across Silicon Valley must seek other sources to meet their financial needs.
Other government officials have made statements regarding the situation and Representative Ro Khanna took steps to assist, sending messages to both the White House and Treasury Department. On Friday, he tweeted that he had contacted these departments in order to gain more information on this matter with the bank.
Last Friday, US Treasury Secretary Janet Yellen convened with banking regulators such as the FDIC to analyze the collapse of SVB. Ms. Yellen's announcement declared that our banking system "remains resilient" and that regulatory entities have powerful resources to respond to this type of situation.
Two days after the crypto-friendly Silvergate Bank surprisingly liquidated, Silicon Valley Bank quickly followed suit and abruptly shuttered its operations. The parent company of Silvergate Bank, Silvergate Capital Corporation, had previously revealed their decision to wind down business activities on Wednesday.
Following the downfall of FTX in November 2020, Silvergate was one of the most affected lenders. A run ensued and they were compelled to liquidate $5.2 billion worth of debt securities from their balance sheets at a substantial loss in order to pay back nearly $8.1 billion owed due to user withdrawals.
ChrisAn editor at Coincrop
Jonathan is a Coincrop staff writer based in the UK, covering the best rates for cryptocurrency earning and borrowing products. When not at work, he's likely sailing.
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