Failed Bank Sells for Less Than a Happy Meal After Bank Run

Follow America's fastest-growing news aggregator, Spreely News, and stay informed. You can find all of our articles plus information from your favorite Conservative voices. 

On Monday, the British arm of Silicon Valley Bank (SVB) was bought by HSBC after all-night talks. The move comes after SVB, one of the largest banks in the United States, collapsed last week due to a liquidity crisis.

The Federal Deposit Insurance Corporation (FDIC) took control of SVB on Friday and announced that it would be reopening under the control of a newly created national bank, Santa Clara National Bank & Trust. The FDIC also said that all depositors would be protected.

HSBC has now stepped in to buy the British arm of SVB for a whopping $1.21 (or £1 in UK currency). This move will ensure that customers in Britain are not affected by the collapse and will still have access to their accounts and funds.

The collapse of SVB has been attributed to a number of factors including mismanagement, poor risk management practices and low interest rates. It is believed that SVB had become overstretched due to its aggressive expansion plans in recent years and had taken on too much risk.

The news has sent shockwaves through the banking sector with many regional banks seeing their stocks fall as investors worry about further failures. Joe Biden has sought to reassure people that the banking system is safe, but some analysts are warning that more failures could occur if banks do not take steps to improve their risk management practices.

The Daily Caller reported,

Regulators shut down SVB after its stock plummeted 60% on Thursday in premarket trading Friday. Fox News host Tucker Carlson described the institution’s collapse as similar to the “bank run” in 1929 or the more recent collapse of cryptocurrency exchange FTX. 

The collapse is the largest of any bank since the 2008 global financial crisis, the BBC reported. The institution specialized in lending to technology companies. Some firms, such as Lingumi, an educational start-up, said that 85% of its cash was held in SVB, leading to an “anxious weekend,” the co-founder told the outlet.

Elizabeth Warren, a US Senator from Massachusetts, wrote an opinion piece in The New York Times calling for more regulation of banks so that such collapses can be prevented in future. She argued that banks should be required to hold more capital so they can absorb losses without having to turn to taxpayers for help. Imagine that…a Democrat calling for more regulation.

Who knows what will happen next for Silicon Valley Bank? but it’s clear that its failure has rattled investors and raised questions about how well regulated and managed our banking system really is. It is hoped that regulators and politicians will take action soon so we can prevent similar collapses from happening again in future.