The U.S. Federal Deposit Insurance Corporation is acting as trustee for the failed Silicon Valley Bank to meet the bank’s financial responsibilities to its customers and employees.
A bankruptcy is painful, and Silicon Valley Bank’s is no exception. The workers of any company that goes bankrupt are the ones who suffer the most when they become unemployed. This time, thanks to the quick intervention of the California and federal governments, SVB bank employees got a small reprieve from their misfortune by receiving special bankruptcy bonuses.
The U.S. Federal Deposit Insurance Corporation offered Silicon Valley Bank employees 45 days of employment and 1.5 times their salary, according to some reports.
CNN shared a conversation with an FDIC official, who explained that it is standard practice and one of the first steps the independent government agency takes after being named receiver.
Axios, another news portal, added more details, asserting that SVB workers also received their annual bonuses on Friday, just hours before the FDIC took over the collapsed lender.
The bank had more than 8,500 employees at the end of 2022.
For the time being, and according to FDIC information, SVB’s main office and 17 branches, located in California and Massachusetts, reopened on a day-to-day basis Monday.
Employees, except for essential and branch workers, were told to continue working remotely, Reuters reported.
The FDIC is an independent government agency that insures bank deposits and supervises financial institutions. So, with the closure of SVB, the FDIC acts as receiver, which generally means it will liquidate the bank’s assets to pay its customers, including depositors and creditors.
The FDIC said all insured depositors will have “full access” to their insured deposits no later than this Monday morning, and will pay uninsured depositors an “early dividend within the next week.”
Silicon Valley Bank, also known by its acronym SVB, collapsed early Friday morning after it faced a 48-hour bank run and a capital crisis, marking the second-largest failure of a financial institution in U.S. history.
California regulators acted quickly, shutting down the technology lender and placing it under the control of the FDIC.