Elon Musk, the CEO of Tesla and new owner of Twitter, recently stated that he is “open to the idea” of purchasing Silicon Valley Bank (SVB), which U.S. regulators shut down Friday due to a run on deposits.
Business Insider reports that in a recent reply to a tweet, Twitter owner and Tesla CEO Elon Musk stated that he was “open to the idea” of purchasing Silicon Valley Bank after the financial institution was shut down by U.S. regulator due to a run on deposits by customers. While some social media users have supported the idea, Tesla investors expressed reservations.
SANTA CLARA, CALIFORNIA – MARCH 10: People line up outside of the shuttered Silicon Valley Bank (SVB) headquarters on March 10, 2023 in Santa Clara, California. (Photo by Justin Sullivan/Getty Images)
Startup founders started taking money out of SVB on Thursday as a result of the bank’s stock price dropping after it announced a capital raising on Wednesday night. The fact that receivers are now in charge of the bank may cause access to deposits to be severely delayed.
Breitbart News reporter John Carney discussed the situation, writing:
The collapse of Silicon Valley Bank was caused by a massive run on the bank, with customers initiating withdrawals of $42 billion this week.
The bank was placed into Federal Deposit Insurance Corp. receivership on Friday after the California Department of Financial Protection and Innovation (DFPI) determined the bank had been rendered insolvent.
Prior to the run on the bank, the bank was in “sound financial condition,” according to the DFPI. Customers withdrew $42 billion, leaving the bank with a negative cash balance of $958 million.
Here’s the summary of what happened from the DFPI’s order taking possession of the bank:
“On March 8, 2023, the Bank announced a loss of approximately $1.8 billion from a sale of investments (U.S. treasuries and mortgage-backed securities). On March 8, 2023, the Bank’s holding company announced it was conducting a capital raise. Despite the bank being in sound financial condition prior to March 9, 2023, investors and depositors reacted by initiating withdrawals of $42 billion in deposits from the Bank on March 9, 2023, causing a run on the Bank. As of the close of business on March 9, the bank had a negative cash balance of approximately $958 million. Despite attempts from the Bank, with the assistance of regulators, to transfer collateral from various sources, the Bank did not meet its cash letter with the Federal Reserve. The precipitous deposit withdrawal has caused the Bank to be incapable of paying its obligations as they come due, and the bank is now insolvent.”
Prior to its collapse, Silicon Valley Bank was the 16th largest bank by assets in the U.S. Federal Reserve data shows the bank had $209 billion in assets as of December 31, 2022.
Min-Liang Tan, cofounder and CEO of Razer, a company that sells gaming computers and peripherals, tweeted: “I think Twitter should buy SVB and become a digital bank.” Musk responded: “I’m open to the idea.”
I’m open to the idea
— Elon Musk (@elonmusk) March 11, 2023
One Twitter user was supportive of the idea, stating “what an opportunity.” But another Twitter user and Tesla investor named Sanjay, whose Twitter profile describes him as a “Tesla customer and investor, bull and Elon fan,” stated: “And sell another $20 billion worth of $Tesla stock. No thanks!”
The share price of Tesla was negatively impacted by Musk’s series of sales of Tesla stock last year to pay for his purchase of Twitter. He sold stock for $8.5 billion in April, $6.9 billion in August, $3.95 billion in November, and $3.6 billion in December, for a total of nearly $23 billion.
by Lucas Nolan
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