FDIC Creates Bridge Bank to Fully Protect Silicon Valley Bank Depositors
The FDIC transfers all insured and uninsured deposits from the failed Silicon Valley Bank to a newly created bridge bank, ensuring customers retain full access to their funds. Taxpayers will not bear any losses from this systemic risk resolution.
The Federal Deposit Insurance Corporation (FDIC) transfers all insured and uninsured deposits from the failed Silicon Valley Bank to a newly created bridge bank called Silicon Valley Bridge Bank, N.A. This decisive action ensures that all depositors have full access to their money starting this morning through online banking, ATMs, debit cards, and check writing. The California Department of Financial Protection and Innovation originally closes the bank on March 10, prompting the FDIC to step in as receiver.
The government executes this transfer using a systemic risk exception to guarantee that no depositor loses their money. Taxpayers do not bear any costs associated with this resolution, as the FDIC recovers any losses to the Deposit Insurance Fund through a special assessment on other banks. However, shareholders and certain unsecured debt holders are not protected, and the senior management team is removed from their positions.
This bridge bank structure operates as a chartered national bank under a board appointed by the FDIC to bridge the gap between the sudden failure and a final, orderly resolution. By taking over substantially all assets and Qualified Financial Contracts, the FDIC preserves the ongoing value of the institution. Borrowers continue to make their usual loan payments while the FDIC works to stabilize the operations and maximize recoveries for creditors.