In this article, we’ll delve into the recent news about Silicon Valley Bank and its employees receiving their annual bonuses just hours before the government takeover.
Key Takeaways:
The recent news about Silicon Valley Bank and its employees receiving their annual bonuses just hours before the government takeover has sparked controversy and raised questions about the state of the failing institution.
Sources with knowledge of the payments stated that Silicon Valley Bank has traditionally paid employee bonuses on the second Friday of March.
However, this year, bonus day happened to fall on the bank’s final day of independence.
As the bank was in the midst of a bank run caused by panicked venture capital investors and startup founders, the FDIC seized the institution around midday on Friday.
While the size of the payouts remains unknown, Glassdoor.com reports that SVB bonuses range from approximately $12,000 for associates to $140,000 for managing directors.
In 2018, the bank was the highest-paying publicly traded bank, with employees earning an average of $250,683 for that year.
After the bank’s seizure, the FDIC provided SVB employees with 45 days of work. The bank had 8,528 employees in December.
Nonetheless, an FDIC spokesperson did not discuss the bonuses, which caused many to speculate about the morality of the payouts’ timing.
As per CNBC’s report, Silicon Valley Bank typically issues their bonuses on the second Friday of March.
The recent bonuses were already in the process of being distributed days before the bank’s collapse on Friday. Additionally, the bonuses were given for work done in 2022.
Silicon Valley Bank’s takeover by the government has caused widespread concern in the tech industry, particularly regarding its impact on startups and venture capital firms.
The bank’s collapse is the largest since the 2008 recession.
The FDIC has established the National Bank of Santa Clara to keep the deposits and other assets of the failed Silicon Valley Bank.
The situation has drawn attention to the fact that 93 percent of the $161 billion deposited at Silicon Valley Bank is not insured by the FDIC. While the FDIC insures deposits up to $250,000, officials are reportedly looking into backstopping all deposits in the bank.
Lawmakers from both parties have spoken out against potential bailout options for Silicon Valley Bank, saying that it would not be a solution for navigating the second-largest bank collapse in U.S. history.
Meanwhile, regulators began auctioning off the failed bank on Saturday and required parties to submit their bids by 2 p.m. on Sunday.
As the fallout from the Silicon Valley Bank collapse continues, many are left questioning the ethics of paying out bonuses just hours before a government takeover.
This occurrence has emphasized the requirement for additional supervision and control in the banking sector to avoid comparable breakdowns from happening in the future.
