“The problem is this was a rush, this was a liquidity failure. It was a bank run, so they didn’t have time to prepare to market,” Bair said.
Former FDIC chair Sheila Bair said Sunday that finding a buyer for Silicon Valley Bank is the “best outcome” after it was shut down by regulators last week over concerns about its solvency.
The shutdown of Silicon Valley Bank, one of the leading lenders to the tech sector, marked the second-largest bank collapse in U.S. history. The move prompted a wider sell-off in stocks and sparked fears that other banks may be at risk of failure.
“That’s the smoothest way to handle these,” Bair said in an appearance on NBC News’ “Meet the Press.” “In almost all of our bank failures during the great financial crisis, we had about 400 of them, we did purchase an assumption, we sold a failed bank to a healthy bank. And usually the healthy acquirer would also cover the uninsured because they wanted the franchise value of these large depositors, so optimally, that’s the best outcome.”
“The problem is this was a rush, this was a liquidity failure. It was a bank run, so they didn’t have time to prepare to market,” Bair added.
“The banks are having to do that now and playing catch up.”