Earlier today, the Federal Deposit Insurance Corporation (FDIC) placed Silicon Valley Bank (SVB) into receivership. One of the country’s 20 largest banks, SVB is a backbone for the US innovation economy. SVB’s clients power technology development critical to American prosperity, human health, and national security. SVB clients are currently unable to access any of their funds, and expect to access only $250,000 starting on Monday.
As a result, many innovative businesses all across America will be:
- Unable to make payroll next week, impacting the financial security of tens of thousands of American workers and their families;
- Unable to receive customer payments, including major grants from the US government to advance key technologies;
- Unable to make payments to key vendors, sending shockwaves throughout the industrial, technology, and life sciences industries nationwide.
There are key steps the US Treasury and FDIC can take to ensure that these vital, innovative small businesses continue to drive American innovation and to protect Americans working nationwide:
- Make clear – as members of Congress have called for – that deposits up to the full amount of the accounts will be honored. This action does not bail out investors or lenders; it ensures that companies can honor their commitments to their employees, and that critical transactions – like payroll – can proceed.
- Provide access to the account amounts – or at least a significantly higher threshold than $250,000 per deposit – by Monday, March 13. The simplest and fairest solution is to honor cash accounts as cash accounts.
- Make clear the FDIC’s strategic intention for SVB. We believe that an acquisition of SVB – which is a leader in the innovation ecosystem with over 8500 employees – by another large US-based financial institution would be by far the best outcome for the US national interest.
Failing to act now would place the Biden Administration’s signature achievements in jeopardy. Inaction will erase billions of dollars – currently stranded at SVB – that were invested in companies by the US government, including grants from the Bipartisan Infrastructure Law initiatives for batteries in the United States, the Department of Energy’s SCALEUP program for critical materials, and other key initiatives.
Handing a win to China in the global competition for innovation and sustainable technologies would be a historic mistake.
SVB may be “Silicon Valley Bank” but the impact of its failure hits small businesses nationwide, from the Space Coast in Florida to the innovation hubs of Austin and Houston to the broader West Coast.
Time is of the essence – we urge the US Treasury to address this existential threat to American innovation before the start of business on Monday, March 13, 2023.