To safeguard all depositors at Silicon Valley Bank in Santa Clara, California, the Federal Deposit Insurance Corporation (FDIC) has taken action. All deposits, both insured and uninsured, and nearly all assets have been moved to a brand-new, fully functional "bridge bank" run by the FDIC.
This morning, the brand-new Silicon Valley Bank, N.A., will reopen and resume regular banking operations, including online banking. Customers of Silicon Valley Bank, N.A. will automatically include depositors and borrowers. and have check writing, ATM, and debit card access to their money. The transfer of all deposits was completed under the systemic risk exception allowed on March 12, 2023.
Tim Mayopoulos was appointed CEO of Silicon Valley Bank, N.A. by the FDIC. He previously held the positions of president of Blend Laboratories, Inc. and president and CEO of the Federal National Mortgage Association. This will enhance recoveries for creditors and the Deposit Insurance Fund, safeguard depositors, and maintain the value of Silicon Valley Bank's assets and operations (DIF).
The purpose of the bridge bank structure is to "bridge" the time between a bank's failure and the point at which the FDIC can stabilize the organization and put an orderly resolution in place. Senior management has been fired, and holders of some unsecured debt will not be protected. A special assessment on banks will be used to recoup any losses to the DIF from supporting uninsured depositors, as required by law.
All Qualified Financial Contracts of the defunct bank were also transferred to the bridge bank by the receiver for Silicon Valley Bank. By taking this step, depositors will be guaranteed complete access to their funds and be shielded from any damages resulting from Silicon Valley Bank's bankruptcy.
