CBS Financial News

On March 10, 2023, California's financial watchdog shut down Silicon Valley Bank (SVB) following an announcement of a significant sale of assets and stocks to raise $2.25 billion in capital to shore up operations. As a result, the Federal Deposit Insurance Corporation (FDIC) was appointed as the receiver to protect insured deposits. While the FDIC only insures up to $250,000 per depositor, per institution, and per ownership category, concerns are mounting about the impact of the collapse of SVB, particularly on small businesses that employ people across the country.

The sudden collapse of Silicon Valley Bank has set the stage for the latest fight over the role of the federal government in the financial sector, with Republican 2024 presidential hopefuls threatening to make any hint of a taxpayer-funded bailout a campaign issue.The issue’s clout and staying power will likely depend heavily on whether regulators are able to successfully shield the banking system from wider fallout, and by how losses are dealt with for depositors with holdings above the Federal Deposit Insurance Corp.’s $250,000-protection limits.Nikki Haley, the former South Carolina governor and United Nations ambassador running for the GOP nomination, was among the first in the still-emerging GOP field to call for no taxpayer exposure to the bank’s failure and by Sunday was already soliciting online campaign contributions on the topic.“Taxpayers should absolutely not bail out Silicon Valley Bank,” she said in a statement. “Private investors can purchase the bank and its assets. It is not the responsibility of the American taxpayer to step in. The era of big government and corporate bailouts must end.”

Silicon Valley Bank's customers, along with investors and bankers across the globe, are waiting for an announcement from U.S. regulators about what comes next after the largest bank failure since 2008.

After regulators shuttered Silicon Valley Bank and seized its deposits Friday, U.S. Treasury Secretary Janet Yellen said Sunday that she has been working «to address the situation in a timely way,» but that a major government bailout is not on the table.

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