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Regulators take over Silicon Valley Bank, citing poor 'liquidity and insolvency' | American Banker

Seiberg said that it's possible that all depositors will be made whole, since the FDIC said that Silicon Valley Bank's assets exceeded its liabilities by nearly $35 billion on Dec. 31, 2022.

John Popeo, a principal at The Gallatin Group who worked for the FDIC leading bank failure deals during the nancial crisis, predicted that the status of Silicon Valley Bank's unusually high amount of uninsured deposits will now become a subject of contention.

The preferred method of an all-deposits transaction is now off the table, he said, which would have made the process for recovering those uninsured deposits signi cantly easier.

Typically, he said, the kind of transaction that Silicon Valley Bank is undergoing is reserved for situations where there is no prospective acquirer.

"For the uninsured deposits, the depositors will still have the claim against the receiver," Popeo said. "They will have to le a proof of claim with the FDIC's receiver, and the status of what they'll be eligible for is unknown."

Popeo also noted that the timing of the bank's failure — during work hours on a Friday — was unusual.

"That's amazing," he said. "Banks are not supposed to fail until their scheduled closing time. So this speaks to the urgency of the situation."

Allissa Kline and Kevin Wack contributed to this story.

Polo Rocha Staff Writer, American Banker Claire Williams Reporter, American Banker

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