Newsom says he’s working with White House to stabilize Silicon Valley Bank

Silicon Valley Bank had been planning to open a branch at 414 California Ave. Post photo by Braden Cartwright.

Gov. Gavin Newsom said this morning (March 11) that he is working with “the highest levels of leadership” at the White House and the U.S. Treasury to stabilize the situation with the Silicon Valley Bank as quickly as possible.

A run on the bank Thursday prompted state regulators to close it Friday. The Federal Deposit Insurance Corporation (FDIC) was appointed as receiver of the bank in response.

“Over the last 48 hours, I have been in touch with the highest levels of leadership at the White House and Treasury,” Newsom said.

“Everyone is working with FDIC to stabilize the situation as quickly as possible, to protect jobs, people’s livelihoods, and the entire innovation ecosystem that has served as a tent pole for our economy,” Newsom said.

Forbes named the bank last year as one of America’s best banks.

Investors and depositors tried to withdraw $42 billion in deposits Thursday. That left the bank with a negative cash balance of nearly $1 billion at the close of business Thursday, court documents said.

The run on the bank made it “incapable of paying its obligations as they come due, and the bank is now insolvent,” officials with the California Department of Financial Protection and Innovation said in an order taking possession of the bank and its business.

The bank was in sound financial position Wednesday, but it sold U.S. treasuries and mortgage-backed securities that day and suffered a loss of $1.8 billion. That’s what prompted customers to try to get their money before they couldn’t.

Silicon Valley Bank has 17 branches in California, New York and Massachusetts. It had more than $175 billion in deposits and $209 billion in assets at the end of the year.

In comparison, Washington Mutual had $307 billion in assets when it failed in September 2008. Washington Mutual and a subsidiary had combined deposits of $188 billion when JP Morgan Chase purchased it that year.
The FDIC said Friday that all insured depositors will have access to their insured deposits no later than Monday.

State regulators appointed the FDIC as receiver of Silicon Valley Bank to ensure insured customers have access to their money. Banking activities at Silicon Valley Bank will resume no later than Monday. That includes online services, federal officials said.

Customers with more than $250,000 in deposits at Silicon Valley Bank should get in touch with the FDIC at (866) 799-0959. Customers with loans from Silicon Valley Bank should continue to make payments.
Silicon Valley Bank is the first FDIC-insured institution to fail in 2023. — Bay City News

7 Comments

  1. Your article about SVB in the Saturday issue was terrific. The demise of Silicon Valley Bank would make an exciting movie. Can you image the chaos in the CEO offices last Wednesday and Thursday. “We need to call the FDIC”, “what’s the phone number”, get me the phone number, quick….”

  2. Gavin worked desperately with the white house to bail out SVB, because Gavin has his 3 winery’s account at that bank. That’s the only time you see a politician work-when they get something out of it for themself.

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