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The US Federal Deposit Insurance Corporation (FDIC) began an auction process for Silicon Valley Bank (SVB) late Saturday night, according to reports. Final bids must be submitted by Sunday afternoon. Unnamed sources indicate the FDIC is trying to close the deal immediately after California regulators shut down the bank and placed it in FDIC receivership on Friday.
The collapse of Silicon Valley Bank (SVB) has caused considerable stir in the US, as many believe it has exposed a weakness in the US banking system. However, US Treasury Secretary Janet Yellen has argued that the system is “tight” and “safe and well capitalized.” According to a recent Bloomberg report, an auction for SVB started on Saturday night, and final bids will be selected on Sunday.
Anonymous sources cited by Bloomberg say the FDIC is working quickly to sell SVB assets before branches open on Monday. The report states that final bids are due by Sunday afternoon, with a final decision potentially not being made public until Sunday evening. Bloomberg contributor Matthew Monks attempted to contact the FDIC for comment, but was unable to reach anyone outside of their normal business hours.
The SVB failure has triggered a significant debate about whether the bank will receive a rescue operation. Based on Yellen’s statements, however, it appears that a bailout is not being considered. Many tech entrepreneurs and venture capitalists, including Galaxy Digital Mike NovogratzY Combinator’s Garry Tanand Craft Ventures’ David Sackscalls for a federal bailout.
Billionaire Bill Ackman, CEO of Pershing Square Capital Management, has stressed the need for a bailout, warning of “several bank runs” by Monday if measures are not taken. In response to the situation, hundreds of venture capitalists and funds in the US and UK have issued a statement expressing hope that the bank will be “adequately capitalized.”
What do you think the future holds for Silicon Valley Bank and the broader US banking industry in light of the ongoing bailout debate and the potential weaknesses in the system? Share your thoughts on this topic in the comments section below.
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