FDIC Seeks Help To Restart Sale Of Silicon Valley Bank After First Attempt Falters

US banking regulators have been placed in a challenging situation following the collapse of Silicon Valley Bank, as they are now responsible for protecting depositors and preventing further bank runs. Regulators are now facing the daunting task of attempting to auction off the failed bank for a second time, but this time have sought the assistance of an investment bank to explore potential options.

Regulators at the US Federal Deposit Insurance Corp (FDIC) tapped advisors at the investment bank Piper Sandler Companies to relaunch a failed auction of SVB, according to Reuters, citing people familiar with the matter.

Officials from the FDIC seized SVB last Friday after $42 billion of deposit withdrawals one day prior caused the bank to fail. A weekend auction of the bank to top institutions proved to be unsuccessful.

On Monday, sources informed about the situation told WSJ that FDIC officials had told Senate Republicans that they now had more flexibility to sell the bank after it was declared a failure and threat to the US financial system. 

Fast forward to Wednesday, these latest updates reveal that the FDIC is making arrangements for a potential second sale, with the possibility of considering selling the bank as a whole or exploring piecemeal deals. 

Meanwhile, the parent of Silicon Valley Bank, SVB Financial Group, has been separately searching for a buyer for its investment bank and investment business. 

It is worth noting that there were potential buyers for SVB over the weekend, but FDIC officials prevented the sale.

Kevin Hassett reveals “there were buyers who were willing to step in & buy [SVB, but] the radicals at the @FDICgov basically weren’t going to allow that to happen … the Biden Admin had a whitelist of companies that were allowed to buy the failed bank & companies that weren’t.” pic.twitter.com/Tsp2zPK70t

— Tom Elliott (@tomselliott) March 13, 2023

… and another scandal emerges.