What's really going on behind SVB auctions?

Kerem Gülen
Mar 14, 2023
Updated • Mar 14, 2023
Companies
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Regulators are reportedly making preparations to try the auction of Silicon Valley Bank again following an unsuccessful attempt to find a buyer over the last weekend.

The bank's substantial size is presenting a challenge for regulators, who tend to prefer selling off failed companies to ensure an effortless resolution.

It is quite rare for financial institutions equipped to acquire a large regional bank with assets surpassing $50 billion to be found, according to Martin Gruenberg, the current Federal Deposit Insurance Corp. (FDIC) chairman. Gruenberg expressed his opinion on the matter previously in a 2019 speech at Brookings.

The combined assets of Signature Bank and Silicon Valley Bank, both of which experienced failures in 2023, amounted to an impressive $319.36 billion. It's worth noting that Martin Gruenberg highlighted that most bank failures are considerably smaller in scale.

In reality, more than 98% of bank failures that occurred since 2007 were related to banks with assets valued at less than $10 billion. It's crucial to keep in mind that a bank is only regarded as failed when regulators take control of it. As a result, Silvergate Bank's recent announcement that it will be liquidating does not fall under this category.

For whom the bell tolls?

The unforeseen collapse of Silicon Valley Bank, which ranks as the second-largest bank failure in the United States, has prompted regulators to take immediate action to reduce the resulting damage, as per a report from The Wall Street Journal. In reaction to the situation, officials from the FDIC have conveyed to Senate Republicans that they have more leeway to assist in the sale of the company.

Sources familiar with the matter have indicated that regulators have categorized the failure of Silicon Valley Bank as a threat to the financial system, allowing them to implement emergency measures. The Wall Street Journal has reviewed the notes on the briefing, shedding light on this development.

The regulators' recent categorization of the failed bank as systemic has given them more freedom in their attempts to cover all depositors impacted by the bank's failure, including those with deposits surpassing the standard insurance limit of $250,000.

Moreover, this action has provided regulators with the ability to offer incentives like loss-sharing agreements to potential buyers, as noted by former regulators. Despite no successful bids from the largest banks in the United States during the previous auction for Silicon Valley Bank on Sunday, at least one offer was submitted by another institution.

Nevertheless, the FDIC declined this offer, as officials informed lawmakers on Monday. The exact schedule for the second auction remains uncertain at this time. The FDIC's takeover of Silicon Valley Bank on Friday occurred following a deposit run, which ultimately proved fatal to the bank's efforts to raise new capital and bolster its financial position.

This unprecedented failure of Silicon Valley Bank underscores the challenges regulators face in managing the risks of large-scale financial institutions. While the FDIC's response highlights the effectiveness of the measures in place to protect depositors, it also raises questions about the potential impact on the broader financial system. As the FDIC prepares for the second auction of the bank, the industry is watching with bated breath to see how the situation unfolds.

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Comments

  1. The Dark Lady said on July 9, 2023 at 11:19 am
    Reply

    Martin, I would appreciate that you do not censor this post, as it’s informative writing.

    Onur, there is a misleading statement “[…] GIFs are animated images …”. No, obviously you don’t seem to have take much notice of what you were told back in March regarding; Graphics Interchange Format (GIF).

    For example, https://www.ghacks.net/2023/03/31/whats-gif-explanation-and-how-to-use-it/#comment-4562919 (if you had read my replies within that thread, you might have learnt something useful). I even mentioned, “GIF intrinsically supports animated images (GIF89a)”.

    You linked to said article, [Related: …] within this article, but have somehow failed to take onboard what support you were given by several more knowledgeable people.

    If you used AI to help write this article, it has failed miserably.

  2. KeZa said on August 17, 2023 at 5:58 pm
    Reply

    AI is stupid, and it will not get any better if we really know how this all works. Prove me wrong.. https://www.youtube.com/watch?v=4IYl1sTIOHI

  3. Database failure said on August 18, 2023 at 5:21 pm
    Reply

    Martin, [#comment-4569908] is only meant to be in: [https://www.ghacks.net/2023/07/09/how-to-send-gifs-on-iphone-two-different-ways/]. Whereas it appears duplicated in several recent random low-quality non relevant articles.

    Obviously it [#comment-4569908] was posted: 9 July 2023. Long before this thread even existed… your database is falling over. Those comments are supposed to have unique ID values. It shouldn’t be possible to duplicate the post ID, if the database had referential integrity.

  4. Howard Pearce said on August 25, 2023 at 12:24 pm
    Reply

    Don’t tell me!

    Ghacks wants the state to step in for STATE-MANDATED associations to save jobs!!!

    Bring in the dictatorship!!!

    And screw Rreedom of Association – too radical for Ghacks maybe

  5. Howard Allan Pearce said on September 7, 2023 at 9:13 am
    Reply

    GateKeeper ?

    That’s called “appointing” businesses to do the state’s dirty work!!!!!

    But the article says itself that those appointed were not happy – implying they had not choice!!!!!!

  6. owl said on September 7, 2023 at 9:50 am
    Reply

    @The Dark Lady,
    @KeZa,
    @Database failure,
    @Howard Pearce,
    @Howard Allan Pearce,

    Note: I replaced the quoted URI scheme: https:// with “>>” and posted.

    The current ghacks.net is owned by “Softonic International S.A.” (sold by Martin in October 2019), and due to the fate of M&A, ghacks.net has changed in quality.
    >> ghacks.net/2023/09/02/microsoft-is-removing-wordpad-from-windows/#comment-4573130
    Many Authors of bloggers and advertisers certified by Softonic have joined the site, and the site is full of articles aimed at advertising and clickbait.
    >> ghacks.net/2023/08/31/in-windows-11-the-line-between-legitimate-and-adware-becomes-increasingly-blurred/#comment-4573117
    As it stands, except for articles by Martin Brinkmann, Mike Turcotte, and Ashwin, they are low quality, unhelpful, and even vicious. It is better not to read those articles.
    How to display only articles by a specific author:
    Added line to My filters in uBlock Origin: ghacks.net##.hentry,.home-posts,.home-category-post:not(:has-text(/Martin Brinkmann|Mike Turcotte|Ashwin/))
    >> ghacks.net/2023/09/01/windows-11-development-overview-of-the-august-2023-changes/#comment-4573033

    By the way, if you use an RSS reader, you can track exactly where your comments are (I’m an iPad user, so I use “Feedly Classic”, but for Windows I prefer the desktop app “RSS Guard”).
    RSS Guard: Feed reader which supports RSS/ATOM/JSON and many web-based feed services.
    >> github.com/martinrotter/rssguard#readme

  7. Anonymous said on September 14, 2023 at 6:41 pm
    Reply

    We all live in digital surveillance glass houses under scrutiny of evil people because of people like Musk. It’s only fair that he takes his turn.

  8. Anonymous said on September 18, 2023 at 1:31 pm
    Reply

    “Operating systems will be required to let the user choose the browser, virtual assistant and search engine of their choice. Microsoft cannot force users to use Bing or Edge. Apple will have to open up its iOS operating system to allow third-party app stores, aka allow sideloading of apps. Google, on the other hand, will need to provide users with the ability to uninstall preloaded apps (bloatware) from Android devices. Online services will need to allow users to unsubscribe from their platform easily. Gatekeepers need to provide interoperability with third-parties that offer similar services.”

    Wonderful ! Let’s hope they’ll comply with that law more than they are doing with the GDPR.

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