In the US, the Federal Deposit Insurance Corporation (FDIC) is an independent agency created by Congress to maintain stability and public confidence in the nation's financial system. According to the latest reports, an auction for the remaining assets of the failed Silicon Valley Bank (SVB) is underway, with final bids due and a result potentially arriving soon enough.
These reports reveal that the FDIC, which stepped in and shut down SVB last Friday as it was experiencing an unprecedented run on funds by its clients, is hoping to conclude the auction before markets open any time beginning from Monday morning.
The reports say a fast sale could help the FDIC make at least some of the uninsured deposits of SVB customers available to them soonest.
Already, the U.S. agency has said it’ll make the insured amounts available in full in time for next week to kick off.
When contacted, a spokesperson for the FDIC said that they are not providing comment on the reports.
The auctioning option typically targets disposing of the company's assets as fast as possible to willing and capable buyers.
However, going by the psychology of auctions, potential buyers approach the deal with the mindset that the seller is desperate and is in such a disadvantaged state that any offer is acceptable. In most cases, the buyers win.
As a potential resolution looms in the background, others in the startup ecosystem are jumping up to find liquidity options for entrepreneurs trying to make payroll next week.
Most recently, Brex CEO Henrique Dubugras said he is working to raise over a billion dollars in a weekend to help fund an emergency bridge credit line.
Considering the strategic position of the SVB to the US startups and fintech in particular and the world in general, it is a candid view for all stakeholders to seek the bailout option for the SVB rather than an outright liquidation.
Congress must permanently consider the impacts of a collapsed SVB on an already bloated and still bloating unemployment market.
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