Due to Silicon Valley’s abrupt collapse, the federal government assumed control of the organization on Friday. When the bank unexpectedly announced Wednesday night that it had sold $21 billion in assets, it sparked a run on its deposit accounts. It is regarded as the US’s second-largest fall ever.
The federal takeover occurred before a Friday global market slump. American banks’ stock market value decreased by over $100 billion from Wednesday to Friday. Cash kept there by the founders of tech start-ups and venture capitalists would be lost because the bank decided to sell assets to enhance its balance sheet, according to the americanmilitarynews.com post.
On Friday, the Federal Deposit Insurance Corporation assumed bank control and moved all deposits to a brand-new bank. Full access to insured savings should be possible “no later than Monday morning,” according to the FDIC.
Janet Yellen, the secretary of the Treasury, stated that she carefully observed how the issue affected other institutions.
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Companies are Affected
Young businesses pulled up their accounts from Silicon Valley, and some could not pay their staff. Since their money was stopped in the bank, business owners rushed to obtain loans in order to pay their employees.
Two years ago, Ashley Tyrner, the owner of FarmboxRx, opened an account with Silicon Valley. After learning of the collapse, she hurried to transfer her account to a new bank, but her wire transfers were unsuccessful, and she now views those 24 hours as the worst of her life. Her company serves food to Medicare and Medicaid members.
Furthermore, Silicon Valley Bank was the identity financial partner of the innovation sector, making its collapse all the more worrying. More than 2,500 venture capital businesses used Silicon Valley Bank as a bank.
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