The bankruptcy of Silicon Valley Bank» (Silicon Valley)belonging to the group (SVB) There are many comments about America, some of which drowned in conspiracy theories, while others talked about the collapse of the US economy and the weakness of its banking system, all of which had nothing to do with what happened. It requires minimal knowledge away from slogans and idle talk.
At the beginning of this week, I contacted an Egyptian-American financial expert who has been residing in the United States for about a quarter of a century, Professor Ahmed Fayed, to inquire about what happened, and I was surprised that he was one of four senior inspectors heading a department for monitoring and evaluating banking risks whose value exceeds $100. billion US dollars, leading a team of 12 experts.
He stated to me that he attended an emergency meeting on March 9 with the aim of discussing the financial situation of Silicon Valley Bank, and making recommendations to the Chairman of the Board of Directors of the Federal Corporation, in coordination with the Central Bank and the State of California (granting the bank’s license), with the aim of protecting deposits and reducing the transfer of risks to banks. And he added: “In this meeting, we decided to close the bank and reserve all its assets, because it was unable to pump liquidity to compensate for its losses and avoid bankruptcy resulting from selling some of its assets (government and real estate bonds) to cover the sudden and huge withdrawal of deposits.”».
Following this decision, the Federal Corporation became the guarantor for the return of deposits to their owners, with a maximum limit of 250 thousand US dollars per person (which is the value of government insurance on deposits), and the owners of uninsured deposits are compensated with a proportional amount until the bank’s assets are liquidated and sold, and any potential losses to depositors are compensated. The biggest loser was the owners of the bank among the investors or owners of its shares and lenders to the bank without mortgaged assets.
Mr. Ahmed told me the story of his travel with his team on Saturday, March 11, to one of the bank’s headquarters in Boston, to implement the seizure of the bank. He said that he met the regional president of the bank, his deputy and his staff, and told them that they are now working under the supervision of the federal institution (affiliated with the government) for a period of 45 days that can be extended, and my colleagues from the heads of departments did the same thing at the bank’s headquarters in California.
And he adds: «From a human point of view, the situation is difficult, as some employees cried, and the situation was exacerbated by our inability to answer some questions, especially related to their financial dues and their investments in the bank.».
The Board of Directors of the Federal Deposit Insurance Corporation, after consulting with the US Treasury Secretary and President Biden, decided to secure all deposits in the “Silicon Valley” bank without a maximum limit, to reduce the spread of panic, and to maintain depositors’ confidence in the US banking system..
As for the reasons that led to the bankruptcy, this will remain the talk of tomorrow.
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