RT.com
18 Mar 2023, 22:13 GMT+10
The move comes days after a class action lawsuit accused the financial group of failing to disclose risks
SVB Financial Group, the parent company of the failed Silicon Valley Bank prior to its takeover by regulators last week, has filed for Chapter 11 bankruptcy, the bank said in a statement on Friday.
While Silicon Valley Bank was seized by the Federal Deposit Insurance Corporation after its value collapsed following a bank run last Friday, the rest of SVB Financial Group, which consists of a venture capital and private credit fund, a registered broker-dealer, and about $2.2 billion in liquid assets, will be sold off in an effort to repay creditors and large depositors alike, though it will not cover all who lost money in the collapse, and a legal battle is expected to follow.
Earlier this week, a shareholder lawsuit filed in the US district court for the Northern District of California alleged that several of SVB's quarterly and annual financial reports had not fully disclosed the risks being communicated by the Federal Reserve between 2020 and 2022 that looming interests rate hikes "had the potential to cause irrevocable damage to the company," or that the losses thus incurred might trigger a bank run.
While the FDIC only covers customer deposits under $250,000, the administration of President Joe Biden stepped in after SVB's collapse to guarantee those exceeding that amount, rankling critics who see it as a bailout masquerading as a regulatory action. While the larger deposits will supposedly be covered through an insurance fund paid for by bank fees rather than taxpayer dollars as seen in the 2008 financial crash, an inordinately large percentage - 94% - of SVB's deposits exceeded the $250,000 cutoff, about twice the typical share at other banks. Senate Republicans pointed out earlier this week that the banks that didn't fail would be unfairly penalized when their own rates increased to cover the hefty payouts to depositors, costs which would ultimately be passed onto the taxpayer, putting them on the hook for a bailout after all.
New York-based Signature Bank collapsed just days after SVB, triggering fears of a wider contagion even as the president attempted to reassure Americans that their finances were safe. Similar to SVB, 90% of its deposits exceeded the FDIC cap.
(RT.com)
Get a daily dose of Beijing Bulletin news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Beijing Bulletin.
More InformationWASHINGTON D.C.: The US Commerce Department has proposed new laws aimed at preventing China and other countries deemed of concern ...
Los Angeles [US], March 25 (ANI): Mark Zuckerberg announced two new updates for WhatsApp groups recently. With the new updates, ...
Paris [France], March 25 (ANI): In the latest move to tackle the surge in privacy and cybersecurity-related risks, the government ...
Washington - U.S. lawmakers grilled the CEO of TikTok over data security and harmful content Thursday, responding skeptically during a ...
Los Angeles [US], March 24 (ANI): Facebook CEO Mark Zuckerberg and his wife Priscilla Chan have been blessed with their ...
Paris [France], March 24 (ANI): A growing number of countries in North America, Europe and Asia-Pacific have banned the popular ...
NEW YORK CITY, New York: To comply with the requirements of the "Made in America" laws, a $7.5 billion federal ...
LONDON, England: During a Bloomberg conference held in London this week, Luke Ellis, CEO of hedge fund Man Group, said ...
NEW YORK, New York - Wall Street jumped on Friday, although gains were modest after bank shares in Europe came ...
LOS ANGELES, California: Some 30,000 education workers in Los Angeles, backed by teachers, went on a three-day strike, canceling school ...
LONDON, England: Despite rising air fares, a potential global economic recession and risks of gridlock at some airports in Europe ...
WASHINGTON D.C.: The US Commerce Department has proposed new laws aimed at preventing China and other countries deemed of concern ...