Key takeaways:
- Silicon Valley Bank (SVB) experienced a bank run, with customers withdrawing $42 billion in deposits.
- The Federal Deposit Insurance Corporation (FDIC) took control of the bank and will pay customers their insured deposits up to $250,000.
- The FDIC will continue to monitor the situation and work with other banks to ensure customers can access their deposits.
On Friday, Silicon Valley Bank (SVB) became the latest victim of a bank run, with customers withdrawing a staggering $42 billion in deposits. This left the bank with a negative cash balance of $1 billion, according to a regulatory filing.
The Federal Deposit Insurance Corporation (FDIC) took control of the bank and said it would pay customers their insured deposits on Monday. However, the FDIC only covers up to $250,000 in customer deposits.
Treasury Secretary Janet Yellen addressed the situation on Sunday’s “Face the Nation” program. She said that America’s economy relies on a safe and sound banking system and that the government may need to intervene and take emergency measures.
The rapid failure of Silicon Valley Bank has left the tech and banking sector skittish about the next shoe to drop. SVB had $77 billion in deposits as of the end of February, and the company and federal regulators were unable to raise enough capital to make up the difference.
The FDIC said it will continue to monitor the situation and work to ensure that customers are protected. The FDIC also said it will work with other banks to ensure that customers can access their deposits.
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