Vehicles are parked outside a Silicon Valley Bank branch in Wellesley, Mass., Saturday, March 11, 2023. Regulators have seized the assets of one of Silicon Valley’s top banks, marking the biggest collapse of a U.S. financial institution since the height of the financial crisis about 15 years ago. (AP Photo/Peter Morgan)
The logo of Silicon Valley Bank is seen at the company’s headquarters in Santa Clara, California, Friday, March 10, 2023. The FDIC is seizing assets of Silicon Valley Bank in the largest bank failure since Washington Mutual at the height of the 2008 financial crisis. The FDIC ordered the closure of Silicon Valley Bank and immediately overtook all deposits at the bank on Friday. (AP Photo/Jeff Chiu)
A Brinks employee walks toward a truck after leaving Silicon Valley Bank, Friday, March 10, 2023, in Santa Clara, Calif. The U.S. hastily seized assets of Silicon Valley Bank on Friday following a bank run, the biggest failure of a financial institution since Washington Mutual at the height of the financial crisis more than a decade ago. (AP Photo/Jeff Chiu)
A person walks past a sign posted at the entrance to Silicon Valley Bank in Santa Clara, Calif., Friday, March 10, 2023. The FDIC is seizing assets of Silicon Valley Bank in the largest bank failure since Washington Mutual at the height of the 2008 financial crisis. The FDIC ordered the closure of Silicon Valley Bank and immediately overtook all deposits at the bank on Friday. (AP Photo/Jeff Chiu)
The Silicon Valley Bank logo is seen through raindrops in Santa Clara, Calif., Friday, March 10, 2023. The FDIC is seizing assets of Silicon Valley Bank in the biggest bank failure since Washington Mutual at the height of the 2008 financial crisis. The FDIC ordered the closure of Silicon Valley Bank and immediately froze all deposits at the bank on Friday. (AP Photo/Jeff Chiu) NEW YORK (AP) — Can Washington rescue depositors of failed Silicon Valley banks? Is this politically feasible? It was one of a growing number of questions being asked in Washington on Sunday, as policymakers tried to figure out whether the U.S. government and its taxpayers should bail out a failing bank that largely provides Silicon Valley with all its wealth and power. Silicon Valley luminaries and executives have been pressing the big red “panic” button, saying there could be more bank runs this week if Washington doesn’t bail out SVB depositors. “Either deposits in the U.S. are safe or not,” David Sacks of Craft Ventures, which is close to billionaires Elon Musk and Peter Thiel, wrote on Twitter on Sunday. If not, See below. Dollars were withdrawn from banks within hours, forcing U.S. banking regulators to scramble to shut down banks midway through the workday to stop a bank run. It was the second-largest bank failure in history, after the collapse in 2008 At the height of the financial crisis, Washington Mutual Bank. Silicon Valley Bank is a unique creature in the banking world. As the name suggests, the 16th largest bank in the United States mainly serves technology startups, venture capital firms, and high-paid skilled workers. Because of this, Silicon Valley The vast majority of the bank’s deposits are in business accounts with balances well above the insurance limit of $250,000. Its collapse resulted in more than $150 billion in deposits now frozen in receivership, meaning startups and other businesses could be in The money could not be recovered for a long time. Staff from the Federal Deposit Insurance Corporation — the agency that insures bank deposits under $250,000 — spent the weekend scouting for potential buyers for the failed bank’s assets. There were no bidders for the assets, but the bank’s body remained in the custody of the U.S. government as of Sunday morning. Despite the panic in Silicon Valley, there was no sign that the bank’s collapse would lead to a crisis similar to that of 2008. The country’s banking system is healthy Yes, holds more capital than at any point in history and has undergone multiple stress tests showing that the system as a whole can withstand even a severe recession. Furthermore, the failure of Silicon Valley Bank appears to be a unique The rise comes amid poor business decisions by bank executives through bond purchases, and the bank’s sole exposure to a specific industry that has contracted severely over the past year. Despite a possibly unique failure, Silicon Valley Bank The collapse of New York did not stop investors from looking for other banks that may have similar circumstances. First Republic Bank, a bank that serves wealthy technology companies, saw its stock drop by nearly a third in two days. PacWest Bank, a bank based in Shares of the California-based bank, which serves small and medium-sized businesses, plunged 38 percent on Friday. While the situation is unique, it’s clear that a bank failure of this scale has raised concerns. Treasury Secretary Janet Yeller and the White House have been The governor of California has spoken with President Biden; Congress has now introduced a bill to increase FDIC insurance limits to temporarily protect depositors. Sunday. But Yellen made it clear in her interview that if Silicon Valley It would be a mistake to expect Washington to save it. Asked if there was a bailout, Yellen said, “We’re not going to do that again. “But we’re worried about savers, and we’re focusing on meeting their needs,” she added. Mark Warner, Virginia, on ABC’s “This Week” Potentially bailing out Silicon Valley’s uninsured savers would be a form of “moral hazard,” said the president, a term often used during the 2008 financial crisis to explain why Washington shouldn’t have bailed out Lehman Brothers The narrative of growing panic among tech industry insiders is that many businesses that park their operating cash with Silicon Valley banks won’t be able to pay salaries or pay office expenses in the days and weeks ahead because those uninsured deposits aren’t being released. However, the FDIC has said it plans to pay savers this week an unspecified “advance dividend” — that is, a portion of uninsured deposits — and has said it will make more advance payments when assets are sold. Ideally, the FDIC finds a single Silicon Valley buyers could benefit from the bank’s assets, or maybe two or three buyers. The bank could also be sold piecemeal over the next few weeks. Todd Phillips, a consultant and former attorney for the FDIC, said he expected that if the bank Asset sales are proceeding in an orderly manner. He said Congress never intended to use deposit insurance to protect business accounts — in theory, businesses should do due diligence on banks when they store cash. Phillips said protecting bank accounts to cover business needs Action by Congress. It’s unclear whether the banking industry would also support higher insurance limits, since FDIC insurance is paid for by banks through assessments, and higher limits require higher assessments. Philips added that the best Washington could do Good thing to communicate that the overall banking system is safe and uninsured depositors will get most of their money back. It would help if people realized they were going to get 80% to 90% of your deposit back, but it will take a while Stop the panic,” he said. Where should you invest $1,000 right now?
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