Lawmakers Seek Answers from Fed, FDIC on Silicon Valley Bank Collapse
Lawmakers in the US held a meeting with the Federal Reserve and Federal Deposit Insurance Corporation on Friday to discuss the swift and stunning collapse of Silicon Valley Bank (SVB).
Democratic US Representative Maxine Waters reportedly discussed with officials from the two federal bank regulators, as well as the Treasury Department, hours after SVB collapsed. Lawmakers from both the Democratic Party and the Republican Party were present at the meetings.
"I am alarmed by the failure of Silicon Valley Bank, which marks the second largest bank failure in U.S. history," Waters reportedly said in a statement, adding that she is closely monitoring and convening Committee members with regulators to understand the latest around the closure of Silicon Valley Bank (SVB). She added:
"I appreciate the DFPI and the FDIC for taking decisive action today, and I remain confident in America’s financial markets and the ability of our regulators to protect consumers and investors."
Silicon Valley Bank, one of the most popular lenders to Silicon Valley tech and growth startups, failed on March 10, falling into the hands of the Federal Deposit Insurance Corporation (FDIC). On Friday, the federal agency took control of the bank and created the Deposit Insurance National Bank of Santa Clara, which now holds the insured deposits from SVB.
Several other lawmakers have also said they were also following the situation. In a Friday tweet, Representative Ro Khanna said he reached out to both the White House and the Treasury Department to discuss the situation with the bank.
Furthermore, US Treasury Secretary Janet Yellen met with banking regulators, including the FDIC, on Friday to discuss the collapse of SVB. In a statement, she said that the banking system "remains resilient" and regulators have effective tools to address this type of event.
Notably, the swift collapse of Silicon Valley Bank came just two days after crypto-friendly bank Silvergate collapsed. As reported, Silvergate Bank’s parent company, Silvergate Capital Corporation, announced Wednesday that it has decided to wind down its operations and liquidate its subsidiary.
Silvergate was among the lenders hit hardest by the fall of FTX in November last year. The crypto bank suffered a run following the collapse of FTX and had to sell $5.2 billion of debt securities it was holding on its balance sheet at a significant loss to cover around $8.1 billion in user withdrawals.
Meanwhile, the aggravating user sentiment around the banking sector has seen the shares of another crypto-friendly, Signature Bank, go downhill. The bank’s shares were down nearly 23% on Friday and more than 37% since the start of the week.
Crypto Firms Take a Hit as SVB Collapses
While venture capital firms and tech startups were most severely affected by the collapse of Silicon Valley Bank, some major crypto companies have also revealed exposure to the bank. For one, USDC issuer Circle has $3.3 billion of its USDC reserves at the collapsed lender.
Furthermore, bankrupt crypto lender BlockFi has $227 million in uninsured funds stuck in an account maintained by the failed lender. Crypto-focused venture capital firm Pantera may also have an unknown amount of exposure to SVB's collapse.
The Avalanche Foundation, which supports the Avalanche blockchain, Yuga Labs, the entity behind the Bored Ape Yacht Club NFT project and some other blue-chip collections, as well as Web3 company Proof are some other crypto companies that have been hit hard by the recent collapse of Silicon Valley Bank.