Connect with us

Business

Silicon Valley Bank’s Assets Seized By US Regulators

Published

2 years ago

on

Silicon Valley Bank

The assets of one of Silicon Valley’s top banks were seized by regulators on Friday, marking the largest failure of a U.S. financial institution since the height of the financial crisis nearly 15 years ago.

Silicon Valley Bank, the nation’s 16th-largest bank, failed this week after depositors rushed to withdraw funds amid concerns about the bank’s health. After the failure of Washington Mutual in 2008, it was the second-largest bank failure in US history.

The bank primarily served technology workers and venture capital-backed businesses, including some of the industry’s most well-known brands.

“This is an extinction-level event for startups,” Garry Tan, CEO of Y Combinator, launched Airbnb, DoorDash, and Dropbox and has referred hundreds of entrepreneurs to the bank, told the Associated Press.

“I’ve heard from hundreds of our founders asking for advice on how to get through this. They’re wondering, ‘Do I have to furlough my employees?'”

There appeared to be little chance of the chaos spreading throughout the banking sector, as it did in the months preceding the Great Recession. The largest banks were most likely to cause an economic meltdown to having strong balance sheets and ample capital.

Silicon Valley Bank's Assets Seized by US Regulators

Silicon Valley Bank customers

According to the bank’s website, nearly half of the U.S. technology and healthcare companies that went public last year after receiving early funding from venture capital firms were Silicon Valley Bank customers.

The bank also boasted of its connections to leading technology companies such as Shopify, ZipRecruiter, and Andreesson Horowitz, one of the top venture capital firms.

Tan estimates that nearly one-third of Y Combinator startups will be unable to make payroll within the next month if they cannot access their funds.

Roku, an Internet TV provider, was one of the victims of the bank’s demise. It disclosed in a regulatory filing on Friday that Silicon Valley Bank held approximately 26% of its cash, or $487 million.

Roku stated that its deposits with SVB were largely uninsured and did not know “to what extent” it could recover them.

As part of the seizure, California bank regulators and the FDIC transferred the bank’s assets to the Deposit Insurance Bank of Santa Clara, a newly formed institution. On Monday, the new bank will begin paying out insured deposits. The FDIC and California regulators intend to sell the remaining assets to make other depositors whole.

Silicon Valley Bank's Assets Seized by US Regulators

Attempting to raise capital

The banking sector has been in turmoil all week, with shares falling by double digits. Then, on Friday, news of Silicon Valley Bank’s troubles pushed shares of almost all financial institutions even lower.

The failure struck with lightning speed. According to some industry analysts, the bank is still a good company and a wise investment. Meanwhile, executives at Silicon Valley Bank were attempting to raise capital and find new investors. However, extreme volatility halted trading in the bank’s shares before the stock market opened.

The FDIC decided to close the bank shortly before noon. Notably, as is customary, the agency did not wait until the end of the business day. The FDIC could not immediately find a buyer for the bank’s assets, indicating how quickly depositors cashed out.

Treasury Secretary Janet Yellen is “watching closely,” according to the White House. The administration attempted to reassure the public that the banking system is in much better shape than it was during the Great Recession.

“Our banking system is fundamentally different than it was a decade ago,” said Cecilia Rouse, chair of the White House Council of Economic Advisers. “The reforms implemented at the time provide the kind of resilience that we’d like to see.”

After the value of mortgage-backed securities linked to ill-advised housing loans collapsed in 2007, the world experienced the worst financial crisis since the Great Depression. The Wall Street panic caused the demise of Lehman Brothers, a firm founded in 1847. Because major banks were so intertwined, the crisis caused a cascading breakdown in the global financial system, putting millions out of work.

According to the FDIC, Silicon Valley Bank, based in Santa Clara, California, had $209 billion in total assets at the time of its failure. It was unclear how many of its deposits exceeded the $250,000 insurance limit, but previous regulatory reports showed that many accounts did.

On Thursday, the bank announced plans to raise $1.75 billion to strengthen its capital position. This frightened investors and shares fell 60%. They fell even further before the opening of the Nasdaq, where the bank’s shares were traded.

As the name suggests, Silicon Valley Bank was a major financial conduit between the technology sector, startups, and tech workers. If a startup founder wanted to find new investors or go public, establishing a relationship with a bank was thought to make good business sense.

Founded in 1983 during a poker game by co-founders Bill Biggerstaff and Robert Medearis, the bank leveraged its Silicon Valley roots to become a financial cornerstone in the tech industry.

Bill Tyler, CEO of TWG Supply in Grapevine, Texas, said he first noticed something was wrong when one of his employees texted him at 6:30 a.m. Friday to complain about not receiving their paychecks.

TWG, which has only 18 employees, had already sent the check money to a payroll services provider that used Silicon Valley Bank. Tyler was trying to figure out how to pay his employees.

“We’re waiting on about $27,000,” he explained. “It’s already a late payment. It’s already an awkward situation. I don’t want to ask any of my employees, “Hey, can you wait until next week to get paid?”

Silicon Valley Bank’s ties to the technology sector exacerbated its problems. After a growth surge during the pandemic, technology stocks have taken a beating in the last 18 months, and layoffs have spread throughout the industry. Venture capital funding is also on the decline.

At the same time, the Federal Reserve’s fight against inflation and an aggressive series of interest rate hikes to cool the economy weighed heavily on the bank.

The value of generally stable bonds begins to fall as the Fed raises its benchmark interest rate. That is not usually a problem, but when depositors become concerned and withdraw their funds, banks may be forced to sell those bonds before they mature to cover the departure.

That is precisely what happened to Silicon Valley Bank, which was forced to sell $21 billion in highly liquid assets to cover the unexpected withdrawals. It suffered a $1.8 billion loss on the sale.

Ashley Tyrner, CEO of FarmboxRx, said she had spoken with several friends whose businesses are venture-backed. She described them as “beyond themselves” after the bank’s failure. Tyrner’s chief operating officer attempted to withdraw funds from her company on Thursday but could not do so in time.

“One friend said they couldn’t make payroll today and cried because they had to notify 200 employees,” Tyrner said.

Related Topics:

Geoff Brown is a seasoned staff writer at VORNews, a reputable online publication. With his sharp writing skills he consistently delivers high-quality, engaging content that resonates with readers. Geoff's' articles are well-researched, informative, and written in a clear, concise style that keeps audiences hooked. His ability to craft compelling narratives while seamlessly incorporating relevant keywords has made him a valuable asset to the VORNews team.

Continue Reading

Business

Sonic the Hedgehog Dominates Christmas Wish Lists

Published

2 days ago

on

2024-12-21

By

Sonic the Hedgehog
Sonic the Hedgehog Merchandise are hot Christmas Items

Sonic the Hedgehog is dominating Christmas wish lists this year. The lovable blue hedgehog is back in the spotlight, from sonic the hedgehog toys and games to sonic the hedgehog coloring pages and movie hype.

Sonic-themed holiday merchandise is on fire, from quirky sweaters to action figures flying off shelves. Sonic the Hedgehog Christmas outfits for kids are selling out fast, making them a go-to gift option for festive fun.

Retailers have been quick to recognize Sonic’s holiday appeal. Special promotions and exclusive items, like the Sonic holiday t-shirts, are everywhere.

Everyone’s stocking up on Sonic merchandise, from big-box stores to boutique retailers.

Online shopping platforms are seeing a surge in searches for Sonic items. Whether it’s Sonic Christmas-themed tops or Sonic the Hedgehog coloring pages, Sonic the Hedgehog toys or Sonic and the Hedgehog 3, the demand is skyrocketing.

Retailers who tap into this trend are sure to see strong holiday sales.

Sonic has been around since the early 90s, but his popularity never wanes. With the release of Sonic 3, fans are more excited than ever.

sonic the hedgehog 4

Sonic the Hedgehog 4

Meanwhile, Paramount Pictures is preparing “Sonic the Hedgehog 4,” with the newest addition in the family-friendly genre set for a spring 2027 release.

The announcement comes as “Sonic 3” opens in theatres on Friday, estimated to gross $55 million to $60 million from 3,800 North American locations.

The sequel is shaping up to be a good holiday season blockbuster for Paramount, which explains the desire in future “Sonic” adventures. On the international front, the film will be released on Christmas Day in 52 markets.

On Rotten Tomatoes, critics gave “Sonic 3” an outstanding 87% fresh score.

The first two films grossed a total of $725.2 million at the global box office and generated over $180 million in global consumer expenditure through home entertainment rentals and digital purchases.

They also inspired a spinoff Paramount+ series, “Knuckles,” which premiered earlier this year.

Related News:

Man Creates Candy Cane Car to Spread Christmas Cheer

Continue Reading

Business

Amazon Strike Called By Teamsters Union 10,000 Walkout

Published

3 days ago

on

2024-12-20

By

Amazon Strike Called By Teamsters Union
Teamsters members were demonstrating at "hundreds" of other Amazon locations.

An Amazon strike has hit facilities in the United States in an effort by the Teamsters union to pressure the corporation for a labour agreement during a peak shopping season.

The Teamsters union told the Associated Press that Amazon delivery drivers at seven facilities in the United States walked off the job on Thursday after the firm failed to discuss a labour contract.

According to the union, Amazon employees in Teamsters union jackets were protesting at “hundreds” of additional Amazon facilities, which the union billed as the “largest strike” in US history involving the company.

The corporation, which employs over 800,000 people in its US delivery network, stated that its services will be unaffected.

It was unclear how many people, including members of Germany’s United Services Union, participated in Thursday’s demonstration. The Teamsters union reported that thousands of Amazon employees were implicated in the United States.

Amazon Strike at 10 Locations

Overall, the group claims to represent “nearly 10,000” Amazon strikers, having signed up thousands of people at roughly ten locations across the country, many of whom have joined in recent months.

The organization has claimed recognition from Amazon going on strike, claiming the firm illegally neglected its obligation to bargain collectively over salary and working conditions.

The Teamsters is a long-standing US union with nearly one million members. It is well-known for securing lucrative contracts for its members at companies like delivery behemoth UPS.

Most of the Teamsters’ Amazon campaigns have concerned drivers working for third-party delivery companies that partner with the tech behemoth.

Amazon denies that it is liable as an employer in those circumstances, which is a point of legal contention. In at least one case, labour officials have taken a preliminary stance in favour of the union.

Stalled Contract Negotiations

Amazon employees at a major warehouse on Staten Island in New York have also chosen to join the Teamsters. Their warehouse is the only Amazon facility in the United States where labour officials have formally recognized a union win.

However, the Amazon strike is because contract negotiations have not progressed since the 2022 vote. It was not one of the areas scheduled to go on strike on Thursday.

Amazon, one of the largest employers in the United States, has long received criticism for its working conditions and has been the target of activists seeking to gain traction among its employees.

Related News:

Amazon Releases Nova, a Fresh Set of Multimodal AI Models.

Continue Reading

Business

Amazon Encounters Numerous Strikes As Unions Aim At The Holiday Shopping Surge.

Published

3 days ago

on

2024-12-19

By

Amazon

(VOR News) – Thousands of Amazon employees at various sites across the country were scheduled to go on strike on Thursday in an effort by the Teamsters union to pressure the retail behemoth to acknowledge its unionised workers in the United States.

The walkout is expected to concentrate on seven Amazon locations across the country during the holiday purchasing surge and may be the most significant union action against Amazon in the nation’s history.

The business announced on Thursday morning that there had been no effect on operations. It also stated that it is “continuing to concentrate on fulfilling customers’ holiday orders.”

The International Brotherhood of Teamsters maintains that it represents more than 10,000 Amazon employees and contractors in aviation centres, warehouses, and delivery centres.

Amazon has refused to acknowledge the union for many years.

The retail giant, which employs approximately 1.5 million individuals, excludes contractors and part-timers. A strike has been initiated by delivery couriers and warehouse employees at seven distinct locations in order to exert pressure on the company to negotiate a collective bargaining agreement that would encompass modifications to compensation, amenities, and working conditions.

Picketing was intended for New York, Atlanta, Los Angeles, San Francisco, and Skokie, Illinois.

Also, the Teamsters assert that they are establishing picket lines at “hundreds” of additional warehouses and delivery centres by encouraging non-unionized workers to picket under U.S. labour law, which protects workers’ ability to take collective action to further their interests.

“Amazon workers are exercising their power,” Randy Korgan stated to NPR.

“They now realise there is a pathway to take on a corporate giant like this – and that they hold the power.” Amazon responds by accusing the Teamsters of fabricating information regarding the strikes, asserting that the participants are “entirely” outsiders rather than employees or subcontractors of the corporation.

Amazon spokesperson Kelly Nantel stated that “the reality is that they were unable to secure sufficient support from our employees and partners and have invited external parties to harass and intimidate our team.” For more than a year, the Teamsters have been intentionally misleading the public by claiming to represent “thousands of employees and drivers.” They do not.

The Teamsters did not provide a specific duration for the strike; however, they informed NPR that it would extend beyond one day. Workers would receive $1,000 per week in strike money, as per the union.

Teamsters President Sean O’Brien issued a statement in which he stated, “If your package is delayed during the holidays, you can attribute it to Amazon’s insatiable greed.” We established a firm deadline for Amazon to attend the meeting and treat our members equitably. They disregarded it.

The Teamsters granted until December 15 to convene with its unionised employees and develop a collective bargaining agreement.

Amazon has opposed all unionisation efforts in court, asserting that unions were not advantageous to its employees and emphasising the compensation and benefits that the organisation currently provides.

Amazon has been accused of discriminatory labour practices on numerous occasions, including the termination of labour organisers. Furthermore, it has disputed its official status as a contract employer.

Teamsters organize Amazon delivery couriers and other employees.

In June, Amazon established its first unionised warehouse in Staten Island, New York, two years after making history by voting to join the fledgling Amazon Labour Union, which is also affiliated with the Teamsters.

The union is one of the most influential in the United States and Canada, with 1.3 million members. On Thursday, the German United Services Union declared that Amazon employees in Germany would participate in a strike in conjunction with their American counterparts.

In the past, Amazon has experienced demonstrations in Germany and Spain that were related to the holiday season in order to advocate for improved wages and working conditions.

“The holiday season has arrived.” Delivery is anticipated. Patricia Campos-Medina, the executive director of Cornell University’s Worker Institute, asserts that “this is the moment in which workers have control over the supply chain.”

The Teamsters have reported that Amazon’s profits have increased both during and after the pandemic. The corporation is currently valued at over $2.3 trillion, with net income of $15 billion in the most recent quarter alone. It is the second-largest private employer in the United States, following Walmart.

SOURCE: NPR

SEE ALSO:

SoftBank Is Courting Trump With a Proposal To Invest $100 Billion in AI.

TVA News Montreal Becomes Most-Watched News Source in Quebec

 

Continue Reading

Trending