That made all customer funds available through the FDIC-operated bridge bank come Monday morning.īut, hold on…today is Friday. ![]() Rather than wait until the end of the day, California regulators intervened around midday on Friday 10 March, putting the bank into FDIC receivership.īy Sunday night, regulators had invoked the “systemic risk exception” for Silicon Valley Bank and Signature Bank, allowing the FDIC to guarantee all deposits, even those above the $250,000 cap. “They did not have the collateral sufficient to support discount window letting,” the Fed’s vice chair for supervision told Congress this week. By Friday morning, SVB expected to face a run of $100 billion. Supercharged by social media panic, depositors yanked $42 billion on Thursday 9 March. Similarly, Silicon Valley Bank’s unraveling happened at a head-spinning pace nearly three weeks ago. “So, it was closed on a Wednesday and the FDIC was issuing checks for a payout the following Tuesday” becayse Monday was Labor Day, and all banks were closed. “There was massive fraud and half the bank’s assets were missing,” Barr said. Of course, Barr notes, a bank failure can happen any day of the week, especially when problems arise suddenly.įor example, back in 1999, First National Bank of Keystone was closed on a Wednesday. “That involves discarding any material with the old bank’s name on it - like posters, cashiers’ checks, and marquee signs - and putting the new bank’s paperwork, advertisements, and employees in place,” Slate wrote during the 2008 banking crisis. The ultimate goal is to get the institution cleaned up and ready to reopen on Monday morning, ideally under new ownership. Teams often pull all-nighters to settle a failed bank’s accounts and figure out what assets can be liquidated. “Now, we have a much more streamlined team on site with the bulk of the work being done from home or the office.” “A team of 45 to 60 people would enter with printers, computers, copiers, boxes, etc.,” Barr said. It’s amusingly similar to how movies and TV make it seem. “Back in the day, most banks were not open over the weekend, so if they were closed COB on a Friday, it gave the FDIC 60 hours to turn it around for reopening,” said David Barr, a spokesman for the Federal Deposit Insurance Corporation, the agency that supervises bank takeovers. When a bank begins to wobble, regulatory authorities usually have enough lead time to plan a takeover and time it to go down when most folks are relaxing over the weekend. Here’s the thing: Regulators would prefer not to freak out customers and spread panic. The short answer: They’re a lot less messy. So, *Seinfeld voice* what’s the deal with Fridays? Friday, March 17, 2023: UBS bids for Credit Suisse to avoid its collapse.Friday, March 10, 2023: Signature Bank sees $10 billion in withdrawals seized by regulators two days later.Friday, March 10, 2023: Silicon Valley Bank seized by regulators, the second biggest bank failure in US history.26, 2008: Washington Mutual seized by regulators marking largest bank collapse in US history. 12, 2008: Last trading day before Lehman Brothers declares bankruptcy. Friday, March 14, 2008: Bear Stearns hit by liquidity crisis.
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