Lawmakers and industry groups are pressing the FDIC and other federal banking regulators to spell out their plans for resolving the collapse of Silicon Valley Bank, whose demise last week unleashed a wave of uncertainty over the banking sector.
Two days after SVB’s collapse, the FDIC has yet to offer concrete guidance on when the bank’s uninsured depositors — whose ranks include thousands of Silicon Valley-backed tech startups and health care businesses — might be able to access their funds. Treasury Secretary Janet Yellen said on CBS’s "Face The Nation" on Sunday that she's been working through the weekend with banking regulators to come up with a solution “in a timely way,” though she declined to offer specifics.
Rep. Josh Gottheimer’s office on Sunday began circulating a letter among lawmakers urging the FDIC, along with the Federal Reserve, Treasury and Office of the Comptroller of the Currency, to take steps to calm markets and offer SVB’s customers clarity.
“We cannot encourage a system where banks are ‘too small to succeed.’ Additional steps need to be taken immediately to give confidence to depositors and discourage them from fleeing to only the largest banks, which is already occurring,” Gottheimer wrote, according to a draft obtained by POLITICO.
The letter calls on the FDIC to identify a buyer for the failed bank, and asks the Federal Reserve and Treasury to encourage banks that have relationships with SVB depositors to extend emergency lines of credit to clients that need assistance covering essential costs.
Gottheimer, a member of the House Financial Services Committee, which has oversight of the industry, urged the Fed to offer liquidity to other banks that might be experiencing a wave of withdrawals in the wake of the bank run that felled SVB.
Other lawmakers, including California Bay Area Democratic Reps. Ro Khanna and Anna Eshoo — whose districts are among those most heavily impacted by SVB’s failure — are clamoring for action to assure that companies will be able to make payroll and fund their operations going into next week.
Lobbyists and industry are arguing that further delay is contributing to growing unease among businesses, particularly high-tech startups.
“We’re trying to be the conduit to make sure folks in Washington understand what this means and how central [SVB] was to the plumbing of the startup economy,” Justin Field, the National Venture Capital Association’s senior vice president of government affairs, said in an interview.
The U.S. Chamber of Commerce urged banking regulators to facilitate a “quick acquisition” of the bank’s assets.
“The bank’s depositors, including a high concentration of businesses in the technology sector and startup ecosystem, need certainty that they will be able to access their cash,” Tom Quaadman, executive Vice president of the Chamber’s Center for Capital Markets Competitiveness, said in a statement.