US lawmakers met with the Federal Reserve and the Federal Deposit Insurance Corporation to discuss the rapid and stunning collapse of Silicon Valley Bank (SVB).
U.S. Democratic Rep. Maxine Waters reportedly discussed the issue with two federal banking regulators as well as the Treasury Department in the hours after SVB collapsed. The meetings were attended by deputies from both the Democratic and Republican parties.
“I am concerned about the failure of Silicon Valley Bank, which is the second largest bank failure in US history,” Waters said in a statement, adding that she is closely monitoring and meeting with members of the Regulatory Authority Committee to understand the latest developments surrounding the closing of the Silicon Valley bank. Bank (SVB). She added:
“I am grateful to DFPI and the FDIC for taking strong 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 Silicon Valley’s most popular lenders to tech and emerging startups, filed for bankruptcy on March 10 after falling into the hands of the Federal Deposit Insurance Corporation (FDIC). On Friday, a federal agency took control of the bank and created the Santa Clara National Deposit Insurance Bank, which now holds SVB’s insured deposits.
Several other lawmakers also said they were also monitoring the situation. In a tweet Friday, Rep. Roe Hanna said he reached out to the White House and the Treasury Department to discuss the situation with the bank.
Also, on Friday, US Treasury Secretary Janet Yellen met with banking regulators, including the FDIC, to discuss the collapse of SVB. In a statement, she said the banking system “remains resilient” and regulators have effective tools to deal with such events.
It is noteworthy that the rapid collapse of Silicon Valley Bank occurred only two days after the collapse of the cryptocurrency bank Silvergate. 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 hardest hit by the fall in FTX last November. The cryptobank suffered after the FTX collapse and was forced to sell the $5.2 billion worth of debt securities it held on its balance sheet at a significant loss to cover the roughly $8.1 billion withdrawn by users.
Meanwhile, sour user sentiment in the banking sector sent shares of another crypto-friendly firm, Signature Bank, lower. On Friday, the bank’s shares fell by almost 23%, and since the beginning of the week – by more than 37%.
Crypto companies take a hit when SVB collapses
While venture capital firms and tech startups have been hit the hardest by the collapse of Silicon Valley Bank, some major crypto companies have also identified risks to the bank. First, USDC issuer Circle has $3.3 billion of its USDC reserves held by a bankrupt lender.
In addition, bankrupt crypto lender BlockFi has $227 million in uninsured funds stuck in an account maintained by the bankrupt. Crypto-focused venture capital firm Pantera may also have an unknown level of exposure to SVB’s collapse.
The Avalanche Foundation, which backs the Avalanche blockchain, Yuga Labs, the organization behind the Bored Ape Yacht Club NFT project, and some other blue chip collections, as well as Web3 Proof are some of the other crypto companies that have been hit hard by the recent Silicon crash Valley Bank.
