Federal regulators are conducting an auction for Silicon Valley Bank, which was shut down by the Federal Deposit Insurance Corporation on Friday, according to several media outlets.
Bloomberg, citing an unnamed source, said the auction process began late Saturday with bids due by Sunday. The New York Times, also quoting an unnamed source, reported that the FDIC was conducting the sale.
News of the auction came hours after Treasury Secretary Janet Yellen said there were no plans for the federal government to bail out the Santa Clara, California-based bank.
Breaking News: Regulators are racing to contain fallout from Silicon Valley Bank’s collapse, putting it up for auction and weighing how to protect deposits. https://t.co/nsmF90Hslg
— The New York Times (@nytimes) March 12, 2023
Treasury officials confirmed the auction to lawmakers and staff members during a call Sunday afternoon, according to The Wall Street Journal.
The shutdown of Silicon Valley Bank, the largest bank failure since Washington Mutual was closed during the recession crisis in 2008, has analysts worried that other financial firms could suffer similar closures due to rising interest rates and jittery depositors considering the withdrawal of their money, the Times reported.
The FDIC created a new bank, the National Bank of Santa Clara, to hold the deposits and other assets of Silicon Valley Bank, according to the newspaper. The FDIC has said that it will make 100% of protected deposits available on Monday, when branches reopen, Bloomberg reported.
If a buyer is not found, the government was considering safeguarding uninsured deposits at the bank, according to The Washington Post.
The FDIC’s standard insurance has a set limit of $250,000 per customer, per bank for each type of account category, CNBC reported.
After Washington Mutual was shut down in 2008, the bank was bought by JPMorgan Chase, according to the news outlet. That deal restored uninsured deposits, according to the news outlet.
Fifteen years later, economists and politicians are concerned that companies that have large, uninsured bank deposits might grow jittery as they watched some Silicon Valley Bank customers face losses, the Times reported.
“The risk is to regional banks, having their assets flee,” U.S. Rep. Ro Khanna, a California Democrat, told the newspaper.
In calls with federal banking regulators late Saturday and Sunday, Democrats said they were “praying for a buyer,” Rep. Brad Sherman, D-Calif., a member of the House Financial Services Committee, told the Post.
“Big buyer, small buyer, fat buyer, skinny buyer -- we need a buyer,” Sherman said. “If they have a bunch of buyers, I would argue you take the best offer.”
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