Explained | What’s next for Silicon Valley Bank? 

Startup-focussed Silicon Valley Bank is the largest bank to fail since the 2008 global economic crisis.  

The story so far: The collapse of the California-headquartered Silicon Valley Bank (SVB) in 40 hours the previous week caused panic in the global tech-based start-up ecosystem.The California Department of Financial Protection (DFPI) closed the bank and took possession of the private lender — citing inadequate liquidity and insolvency. It appointed the Federal Deposit Insurance Corporation (FDIC) as its receiver. 

The private bank has been particularly pivotal in lending support to the technology-based startup ecosystem. The development also categorises SVB as the largest bank to fail since the 2008 global economic crisis.

Treasury Secretary Jennet Yellen ruled out the possibility of a complete bailout of the bank.  

The White House said that the Treasury Department is working with regulators on the next steps. Meanwhile, on Monday, the U.K. government along with the Bank of England facilitated the sale of the beleaguered bank’s U.K. arm to HSBC. 

As previously noted, FDIC was appointed the ‘receiver’— in other words, a temporary guardian to take possession and facilitate the sale or liquidation of the assets to repay the entity’s outstanding debts. Insured depositors were given full access to their deposits Monday onwards, allaying concerns about the availability of deposits.  

The management of the bank has been fired. Shareholders will also not be protected. “Investors in the banks will not be protected. They knowingly took a risk, and when risks don’t pay off, investors lose their money. That’s how capitalism works,” U.S President Joe Biden tweeted. 

Further, as reiterated by Mr. Biden, “No losses would be borne by the taxpayer.”