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SVB workers were paid BONUSES just hours before bank collapsed


From WWW.DAILYMAIL.CO.UK

Financial industry executives  warn that the government only has until Monday to prevent a meltdown and stop contagion spreading to other regional banks

warn that the government only has until Monday

The bank failed on Friday after a 60% drop in shares due to declining customer deposits

Financial industry executives  warn that the government only has until Monday to prevent a meltdown and stop contagion spreading to other regional banks

warn that the government only has until Monday

The bank failed on Friday after a 60% drop in shares due to declining customer deposits

The federal government will not bailout Silicon Valley Bank, despite fears of a market meltdown, Treasury Secretary Janet Yellen announced Sunday.

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The bank, the 16th largest in the US, collapsed on Friday after a 60 percent drop in shares, which sparked a run on the bank as panicked customers withdrew their cash.

It was the worst US financial institution failure since 2008, with SVB controlling $209 billion in total assets at the end of 2022.

President Joe Biden, California Gov. Gavin Newsom, the Treasury Department and the Federal Deposit Insurance Corporation (FDIC) — which now controls the bank’s assets — are holding crisis talks as the try to get other financial institutions to buy out SVB.

But industry experts warn that the government only has until Monday to prevent ‘a domino effect’ among other regional banks and the wider markets.

Despite this, Yellen told CBS News Sunday morning, that a bailout like the one in 2008 is not on the table – though she said she is concerned about the investors.

‘Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out… and the reforms that have been put in place means we are not going to do that again,’ she said.

‘But we are concerned about depositors, and we’re focused on trying to meet their needs.’

The FDIC said insured funds up to a maximum of $250,000 will be available to depositors Monday morning.

For the uninsured deposits, the FDIC said it will pay depositors an ‘advanced dividend within the next week – but many fear they could lose substantial sums or face a long wait to get their cash back.

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‘Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds,’ the agency said in a statement.

‘As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.’

Meanwhile, both the FDIC and Federal Reserve are working with firms on a potential merger with the failed institution.

They are also said to be weighing the creation of a fund that would allow regulators to backstop more deposits.

Any deal would also likely require regulators to give special guarantees and make other allowances to the financial institution that takes over SVB.

President Joe Biden has discussed the situation with Gov. Gavin Newsom as they try to find a possible solution.

In a statement on Saturday, Newsom said: ‘Over the last 48 hours I have been in touch with the highest levels of leadership at the White House and Treasury.

‘Everyone is working with [the] FDIC to stabilize the situation as quickly as possible to protect jobs, peoples’ livelihoods and the entire innovation ecosystem that has served as a tent pole for our economy.’

The announcement comes as it was revealed that employees at the Santa Clara-based bank received their annual bonuses just hours before the bank collapsed.

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Those payments had been processed in the days before SVB collapsed, as the bank normally paid its employees bonuses on the second Friday of every month, CNBC reports.

It is unclear how much the more than 8,500 employees received for the work they did in 2022, but SVB bonuses can range from about $12,000 for associates to $140,000 for managing directors, according to Glassdoor.

SVB was the highest-paid publicly traded bank in 2018, when employees received an average of $250,683.

It was also previously revealed that ex-CEO Greg Becker sold $3.57 million of stock in a pre-planned automated sell-off just two weeks before the collapse.

In total, he offloaded 12,451 shares at an average price of $287.42 each on February 27. At the same time, CFO Daniel Beck sold 2,000 shares at $287.59 per share, ditching $575,000.

By Friday, stock prices plunged to just $29.49 in premarket trading before the FDIC seized the bank’s assets.

There is no suggestion of any impropriety by either Becker or Beck.

In a video message to employees of the bank on Friday, Becker acknowledged the ‘incredibly difficult’ 48 hours leading up to the bank’s collapse.

‘It’s with an incredibly heavy heart that I’m here to deliver this message today,’ he said in a video. ‘I want to acknowledge how hard the last 48 hours have been on all of you. I care so much about all of you. It really is so incredibly difficult.

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‘I am trying to look past to focus on two things. 1.) I am focusing on you and thinking about the ultimate outcome of what this could be despite this incredibly difficult time. And 2.) I’m focusing on clients.’

While the FDIC has taken control of the lender, Becker said he is working with banking regulators to find a partner for the bank, but there is ‘no guarantee’ a deal will be struck.

Becker wore a black zip-up jacket with a logo from Gleneagles, a luxury golf resort in Scotland, and spoke from a room framed by dark cabinets.

‘As you heard this morning, I’m not making those decisions anymore, which is really hard. But I am working with the FDIC to work out how we come up with the best outcome for our clients as well as out employees…. (Read more)

Tweets mentioned:

https://twitter.com/FaceTheNation/status/1634927984799883265



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