Your Tax Dollars at Work: US Backstops Silicon Valley Bank Sale to First Citizens
The United States government has agreed to backstop the sale of Silicon Valley-based banks by First Citizens Bancorp Inc. in a $2 billion deal.
The agreement, which was reached between the Federal Deposit Insurance Corporation (FDIC) and the U.S.
Treasury Department, will provide up to $1.75 billion in funding for the sale of 10 branches in California, Oregon, Washington and Nevada to First Citizens. The deal is expected to close by mid-2021.
First Citizens and other bidders had been vying for control of the banks since October 2020 when they were put up for sale following their failure due to poor construction loan portfolios.
The FDIC had initially sought out sales proposals from firms that could recapitalize the failing institutions but was unable to find any takers due to the high financial risks associated with investing in such companies during a pandemic-ravaged economy.
This acquisition marks a milestone moment for both businesses and taxpayers alike—one that could bring much needed stability back to a volatile industry still reeling from COVID-19-inflicted wounds and economic hardship brought about by mismanaged investments prior to the pandemic’s onset..
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