The Rush to Find a Buyer
The Federal Deposit Insurance Corporation (FDIC) kicked off an intense auction process for the struggling Silicon Valley Bank (SVB) the night of March 11, with reports indicating bids were only accepted for a couple of hours before the deadline on March 12. Talk about a speed dating round in the banking world!
Yellen’s Response: No Major Bailout on the Horizon
On March 12, U.S. Treasury Secretary Janet Yellen stepped into the fray, clarifying that while she’s taking the collapse of SVB seriously, don’t expect the government to throw money around like confetti. Yellen assured us that regulators aim to contain any fallout, quipping that they want to prevent the issues of one rogue bank from spilling into the territory of others standing strong and sound.
A Broader Picture: Foreign Acquisition Possibilities
In a twist, Yellen mentioned the FDIC is contemplating “a wide range of available options,” and foreign banks might find themselves taking up residence in the Californian bank’s ledger. This raises the question: what’s next? A British bank adopting a sunny Californian vibe?
A Hard Hit for Clients
With SVB caught in the storm, clients have reported receiving offers ranging from 55 to 75 cents on the dollar for their unsecured deposits. Essentially, that’s like offering a quarter for a dollar bill. Just the kind of bank discount you want to think about while trying to run a business.
Ripple and the Ripple Effect
Of course, no major banking saga is complete without some chatter in the crypto space. Ripple Ventures’ Matt Cohen shared on Twitter that affected companies have been receiving some eye-wateringly aggressive lending offers to weather the storm. This includes receivership certificates as collateral, which sounds both official and intimidating.
Financial Drama Under the Surface
As the SVB saga unfolded, a quiet audit report listing depositors went dark, leaving many in the dark about where their funds stand. The gamble is hefty here, with assets from Web3 venture capitalists in the ballpark of $6 billion at stake, including jaw-dropping contributions from players like Andreessen Horowitz.
