As Silicon Valley Bank failed on Friday, the American government has taken possession.
The bank, which provides services to some of the most well-known tech investors in the world, became one of the biggest financial institutions to fail since the 2008 global financial crisis.
The Federal Deposit Insurance Corporation was given control of the tech lender after California officials closed it down. The FDIC, acting as receiver, will often liquidate the bank’s assets in order to pay back its customers, including depositors and creditors.
The bank had shocked Wall Street and its depositors less than two days prior with frantic attempts to borrow money in an effort to stave off a collapse brought on by withdrawal requests and a dramatic decline in the value of its investment holdings.
According to the New York Times, a source familiar with the discussions claimed that as of Friday morning, the bank was working with advisers on a potential sale and had ceased trading in its shares after a significant decrease.
The FDIC established the National Bank of Santa Clara to hold the deposits and other assets of the failing bank. The regulator announced in a press statement that the new organization would start operating on Monday and that checks issued by the former bank would still be acknowledged.
Clients receiving certificates for their uninsured monies whose accounts surpassed the $250,000 insurance maximum established by the F.D.I.C. would be among the first to get reimbursement from funds recovered while the F.D.I.C. is holding Silicon Valley Bank in receivership, even if only partially.
The issues at Silicon Valley Bank have been accumulating for more than a year, but this week they abruptly got worse. The 1983 establishment of the Santa Clara, California-based bank made it a popular lender for business owners and their executives.