US authorities declared the Silicon Valley Bank (SVB) closed and seized all of its assets on Friday. The decision, which makes SVB the biggest retail bank to fail since 2008, has shaken up global markets and left investors’ and firms’ billions of dollars stranded.
But Elon Musk, as always, came up with a unique plan.
In the midst of this confusion, Razer CEO Min-Liang Tan recommended that Twitter think about purchasing SVB and converting it into a digital bank. Curious, Twitter boss Elon Musk responded to his message, adding, “I’m open to the idea”.
The Tesla owner’s acceptance of the proposal attracted mixed opinions.
“And sell another $20 billion worth of $Tesla stock. No thanks!” a user said.
“Yeah, give him something to keep him busy. He barely has anything to do,” a cruel comment read
“You’re just missing a bank in your ecosystem,” said another.
What had happened?
A day after its stock price fell by 60%, regulators shut down the startup-focused lender SVB.
It all began when SVB announced a stock offering and sold shares on Thursday in an effort to acquire much-needed cash as it battled declining deposits. Before regulators made their announcement that the bank had been closed, the firm’s shares in New York fell 60% in response. Trading was also halted.
The Federal Deposit Insurance Corporation (FDIC) was appointed as the receiver along with the closure, which was announced by the California Department of Financial Protection and Innovation.
SVB’s chief Greg Becker in a video message assured the employees that he “is working with banking regulators to locate a partner for the bank”. He emphasised that there is “no assurance” that an agreement will be reached.
Interestingly, Silicon Valley Bank, which has 17 locations across Massachusetts and California, was the 16th-largest bank in the country. The Department of Financial Protection and Innovation, California’s bank regulator, issued an order taking possession of the bank on Friday. It states that as of the close of business on March 9, the bank had a negative cash balance of $958 million.