Silicon Valley Bank's failure will cost $20 billion – that's almost a sixth of the pool of funds that insures US depositors
The FDIC's Deposit Insurance Fund balance stood at $128.2 billion as of late 2022.
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- Silicon Valley Bank's failure will cost the FDIC's Deposit Insurance Fund about $20 billion, regulators said in a statement.
- As of December 2022, the Deposit Insurance Fund balance stood at $128.2 billion.
- The Deposit Insurance Fund pools the money that insures US depositors in the event of a bank collapse.
The collapse of Silicon Valley Bank is set to cost the Federal Deposit Insurance Corporation's (FDIC) Deposit Insurance Fund about $20 billion – that's almost a sixth of the total pool of funds that insures US depositors.
As of December 2022, the Deposit Insurance Fund balance stood at $128.2 billion. The FDIC uses the private insurance fund to provide extra cover to the depositors of insured banks. While the FDIC covers you up to $250,000 if your bank fails, the Deposit Insurance Fund covers you for anything over that.
"The FDIC estimates the cost of the failure of Silicon Valley Bank to its Deposit Insurance Fund (DIF) to be approximately $20 billion. The exact cost will be determined when the FDIC terminates the receivership," the FDIC said in a Sunday statement.
Silicon Valley Bank was bought by First Citizens BancShares on Sunday, the parent company of First Citizens Bank.
The deal includes the purchase of about $72 billion of Silicon Valley Bridge Bank assets at a discount of $16.5 billion. About $90 billion in securities and assets will remain with the FDIC for sale.
Silicon Valley Bank was closed on March 10 by regulators after a bank run and capital crisis, in what marked the second-largest bank failure in US history.
Silicon Valley Bank's downfall has sparked chaos in the global banking system. Top market commentators like Bill Ackman have urged regulators to provide a blanket coverage for all US deposits in the event of a bank collapse.
Treasury Secretary Janet Yellen however, has flip-flopped on the idea. Most recently, she told lawmakers that regulators "would be prepared to take additional actions if warranted" to protect the banking system just a day after she said they were not considering a blanket insurance for all bank deposits.