Elon Musk says he is interested in buying SVB after bank goes under
Friday was definitely not a good day for anyone who had their money in Silicon Valley Bank (SVB). By Friday morning, the bank was in such a severe crisis that it closed its doors.
SVB announced as insolvent
When the news of SVB becoming insolvent hit the public, Elon Musk's twitter followers took to their accounts to express their thoughts on the matter.
One follower, Min-Liang Tan, CEO of gaming hardware company Razer, suggested that Musk should use proceeds from Twitter to buy SBV and make Twitter a digital bank.
Musk responded that he was open to that idea, but it hasn't gone any further than that as of yet.
The collapse of SVB set into motion when it announced on Wednesday that it had sold a large number of securities at a loss and that an additional $2.25 billion in new shares would be sold by them to improve its financial strength and stability, according to CNN.
How the average American can protect their money
Personal finance expert Dan Roccato said that SVB isn't the kind of bank in which the average American would have their savings. Saying it's more of a “niche bank” that catered toward start-up companies, he told Fox News during an interview on Saturday.
While it is a large bank, its customers tend to be mostly in the tech industries. He compares what happened on Friday to, "an old fashioned run on the bank."
In this particular instance, he said SVB was buying U.S. treasury bonds with the money coming into the bank, which many banks do.
The problem is that as the Fed raised interest rates, the value of the bonds decreased, "and that means as the depositors came looking for their money, the bank was scrambling around to find it, selling those bonds at a loss created this sort of death spiral, and that's what you and I saw yesterday," he said.
When asked if this could happen to other banks, Roccato said he didn't believe it would be a repeat of the crisis that happened at the end of 2008 and continued into 2009, but he didn't believe it would be a, "one off" either.
"My suspicion is we're going to see a few more of these things, you know, creep up. I don't think it'll rock the system, necessarily, like we saw a few years back," he said.
When asked how average Americans can protect themselves, Roccato said it's important to, "know your bank, know who you’re doing business with" and "always stay within the FDIC limit of $250,000. Since the 1930s when the FDIC was founded, no depositor has lost money as long as they're under that insured amount. Over that amount, it's anybody's guess."
Next steps to handle SBV crisis
By Sunday, Senate Banking Committee member Mark Warner said he believed the best way to handle the SBV crisis for both the bank and its members would be for someone to purchase it by the end of the day.
However, a buyer was not found, and U.S. regulators intervened to prevent a wide-spread market panic as the Asian banks began to open, according to AP news.
The Treasury Department, Federal Reserve and FDIC announced on Sunday that all SVB clients would be protected and able to access their money.
It was also announced that steps were being taken to ensure that additional bank runs would not happen, that deposits were being protected, and that those who wanted to receive access to their funds would be able to access those funds by no later than Monday.
The FDIC said that as of Monday, SVB will reopen under the name Deposit Insurance National Bank of Santa Clara.