RT.com
18 Mar 2023, 22:13 GMT+10
The move comes days after a class action lawsuit accused the financial group of failing to disclose risks
SVB Financial Group, the parent company of the failed Silicon Valley Bank prior to its takeover by regulators last week, has filed for Chapter 11 bankruptcy, the bank said in a statement on Friday.
While Silicon Valley Bank was seized by the Federal Deposit Insurance Corporation after its value collapsed following a bank run last Friday, the rest of SVB Financial Group, which consists of a venture capital and private credit fund, a registered broker-dealer, and about $2.2 billion in liquid assets, will be sold off in an effort to repay creditors and large depositors alike, though it will not cover all who lost money in the collapse, and a legal battle is expected to follow.
Earlier this week, a shareholder lawsuit filed in the US district court for the Northern District of California alleged that several of SVB's quarterly and annual financial reports had not fully disclosed the risks being communicated by the Federal Reserve between 2020 and 2022 that looming interests rate hikes "had the potential to cause irrevocable damage to the company," or that the losses thus incurred might trigger a bank run.
While the FDIC only covers customer deposits under $250,000, the administration of President Joe Biden stepped in after SVB's collapse to guarantee those exceeding that amount, rankling critics who see it as a bailout masquerading as a regulatory action. While the larger deposits will supposedly be covered through an insurance fund paid for by bank fees rather than taxpayer dollars as seen in the 2008 financial crash, an inordinately large percentage - 94% - of SVB's deposits exceeded the $250,000 cutoff, about twice the typical share at other banks. Senate Republicans pointed out earlier this week that the banks that didn't fail would be unfairly penalized when their own rates increased to cover the hefty payouts to depositors, costs which would ultimately be passed onto the taxpayer, putting them on the hook for a bailout after all.
New York-based Signature Bank collapsed just days after SVB, triggering fears of a wider contagion even as the president attempted to reassure Americans that their finances were safe. Similar to SVB, 90% of its deposits exceeded the FDIC cap.
(RT.com)
Get a daily dose of Afghanistan Sun news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Afghanistan Sun.
More InformationTEGUCIGALPA, Honduras: In what could signal the end of his country's decades-long relations with Taiwan, Honduran foreign minister Eduardo Enrique ...
WASHINGTON D.C.: A new US Congressional committee focusing on China held its second hearing on the alleged abuses of the ...
SAN FRANCISCO, California: A new round of extreme winter weather that hit California, also drifted into neighboring Southwest states, with ...
WASHINGTON D.C.: After several high-profile near collision incidents, the US Federal Aviation Administration (FAA) has issued a safety alerts to ...
PHNOM PENH, Cambodia: Two Cambodian opposition figures--- Yim Sinorn and Hun Kosal--- have been charged under the country's rarely used ...
WASHINGTON D.C.: The US Supreme Court has ruled that a deaf student in Michigan can sue his public school district, ...
KABUL, Afghanistan: Afghanistan's education ministry has announced that the country's school year has begun, but the United Nations children's agency, ...
Sharjah [UAE], March 27 (ANI): Pakistan stand-in skipper and all-rounder Shadab Khan believes plenty of positives will come from his ...
Kabul [Afghanistan], March 27 (ANI): Despite recent diplomatic efforts, the relationship between Pakistan and the Taliban is expected to face ...
Islamabad - Taliban authorities in Afghanistan said Monday that a suicide bomb blast outside the foreign ministry in the capital, ...
Islamabad - Witnesses and doctors in Afghanistan said a bomb explosion outside the foreign ministry in the capital, Kabul, had ...
Kabul [Afghanistan], March 27 (ANI): At least two persons were killed and 12 others have been injured in a heavy ...