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A run on a Bay Area bank with billions in deposits prompted state regulators to close it Friday, according to court documents.
Santa Clara-based Silicon Valley Bank, which Forbes named last year as one of America’s best banks, was shut down by the California Department of Financial Protection and Innovation.
Investors and depositors tried to withdraw $42 billion in deposits Thursday. That left the bank with a negative cash balance of nearly $1 billion 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 and Massachusetts, including at 2400 Hanover St. in Palo Alto and 2770 Sand Hill Road in Menlo Park. 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.
Regulators with the Federal Deposit Insurance Corporation, which insures deposits up to $250,000 for member institutions, 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.
Federal regulators did not know Friday morning how much money Silicon Valley Bank had in uninsured deposits, but regulators will determine that amount when they get more information from the bank and its customers.
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.
No one from Silicon Valley Bank responded by mid-Friday afternoon to a request for comment.
STOCK UP
The Silicon Valley Bank run is the tip of the iceberg in the process of calving. We will start seeing hyper-inflation this summer. Hyper-inflation prices go up really fast… daily.
Stock up on:
(1) Food stuff for yourself that will last for many months before it’s consumed…. survival food, you know, dry stuff you can add hot or cold water to and eat.
(2) Stay in business by stocking up on everything you use in business. You will be the core that keep your clients sane. Pay a premium to get this stuff into your possession.
THE FORCAST
Hyper inflation Starts in May (+-)
July – Aug – Sep will be terrible.
After Sep we enter a decades long rebuilding mode.
A natural reduction of accommodation. People are NOT going to be receptive to government telling them what to do. …. Stock Up and stay in business. If you can muster the resources stock up for a 2-year stretch.
I sense we are going into one of the greatest depressions of all time … greater than 1933. We are probably going back to constitutional money not debt money Federal Reserve money we have now. We will probably see reintroduction of the CCC (Civilian Construction Corps) like we had in the 30’s to help build us out of the depression by employing people … like building the proposed 15-new cities…. We’ll likely see new mining and very deep oil drilling for gas and oil as Russia is doing and other countries are starting. The more we can lower the cost of energy the more we can build ourselves back to good health. The academic structure will probably crash quickly in the short run. The huge endowments of our great Universities is mostly invested in stuff from which they can not get their money out. Professors will walk away in search of alternative employment. It’s going to be a rough summer. Use your summer months … not for rioting… but for getting ready for next year. Support your local community as best you can.
Stock up. … NAMASTE… Rich Buckley