Democratic Rep. Ro Khanna of California took to national television Sunday to urge the White House to “take decisive action” in the aftermath of one of the largest bank failures in American history, Silicon Valley Bank. Many of Khanna’s voters, and donors, have been impacted by the bank failure and he wants access to their accounts restored.
Khanna went on CBS to demand his constituents get bailed out: “I think they understand the gravity but they need to take decisive action. Time is ticking,” Khanna said in an interview on “Face the Nation” of President Biden and his administration. “I think the U.S. banking is secure. I don’t think this is a systemic risk. Here’s what’s going to happen. Every person in these tech companies is getting emailed: pull your money out of the regional banks, put them in the Big Four.”
Khanna said there needs to be “more clarity and greater strength” from the Treasury Department, and said there is precedent for the Treasury, in coordination with the Federal Reserve and FDIC, to insure every depositor to prevent a run on regional banks.
“The way to resolve it is to say depositors will have access to the accounts,” he said. “Look, the bargain in our country, from FDR, has always been investors, shareholders lose. I have no sympathy for the executives, no sympathy for people who have stopped there. But the depositors are protected.”
Khanna said many of Silicon Valley Bank’s depositors are climate and health care start-ups, companies in the wine industry and defense firms that help the U.S. remain competitive with China.
“They’re employing Americans across the country, and they didn’t take risks. They just had their money in a bank, and we’re saying those need to be guaranteed,” he said.
Secretary of the Treasury Janet Yellen has said that the White House has no intentions of bailing out SVB. NBC News noted, “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.
‘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 that we’re not going to do that again,’ Yellen told CBS’ “Face the Nation.” “But we are concerned about depositors and are focused on trying to meet their needs.'”
On Sunday, the FDIC, the federal agency that ensures that deposits up to $250,000 are protected, released a statement: “All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.
Silicon Valley Bank had 17 branches in California and Massachusetts. The main office and all branches of Silicon Valley Bank will reopen on Monday, March 13, 2023. The DINB will maintain Silicon Valley Bank’s normal business hours. Banking activities will resume no later than Monday, March 13, including on-line banking and other services. Silicon Valley Bank’s official checks will continue to clear. Under the Federal Deposit Insurance Act, the FDIC may create a DINB to ensure that customers have continued access to their insured funds.”
The Wall Street Journal reported that “regulators are auctioning Silicon Valley Bank as part of a broader effort to contain the fallout from its failure on Friday.
Treasury officials confirmed the auction to lawmakers and staff on a call Sunday afternoon, according to people familiar with the matter, saying bids were expected by 2 p.m. Eastern Time.”
One bidder might be Elon Musk, one of the five richest people in world. The Economic Times of India explained that “Twitter CEO Elon Musk on Saturday said that he is open to the idea of buying the collapsed Silicon Valley Bank (SVB) and turning it into a digital bank.
Min-Liang Tan, cofounder and CEO of Razer (a consumer electronic company), tweeted: ‘I think Twitter should buy SVB and become a digital bank.’ To which Musk replied: ‘I’m open to the idea.'”
Since purchasing the social media giant, Musk has seemed “intent on turning Twitter into a bank, complete with what he describes as a “high-yield money market account,” debit cards, checks, and loans,” The Verge wrote last fall.