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Silicon Valley Bank with Massachusetts branches seized by FDIC as depositors pull cash

Gov. Healey and Mayor Wu issue statements regarding Silicon Valley Bank collapse
Gov. Healey and Mayor Wu issue statements regarding Silicon Valley Bank collapse 01:00

WELLESLEY - Silicon Valley Bank, which has 17 branches in California and Massachusetts, was seized by regulators on Friday, the FDIC announced. 

"In one sense we got here very quickly, in another sense it was gradual," said Cornelius Hurley, a banking law professor at Boston University.

The bank failed after depositors — mostly technology workers and venture capital-backed companies — began withdrawing their money creating a run on the bank. It's the largest bank failure since Washington Mutual during the height of the 2008 financial crisis.  

"FDIC hasn't closed a bank in over three years," said Hurley.

The failed bank's website lists offices in Boston and Newton, as well as Cambridge, Beverly and Wellesley locations that previously served Boston Private clients. A note on the door in Wellesley said "Until further notice the office is closed."

A note on the door says the Wellesley office of Silicon Valley Bank is closed. CBS Boston

Police in Wellesley said there was a line of customers outside the bank Friday morning. Officers responded to the scene when there was confusion about a man trying cut the line who turned out to be an FDIC representative. No one was hurt and police didn't make any arrests.

Concerns surfaced this week about the bank's financial stability, and it announced it had to sell off shares and some of its portfolio become customers were rushing to take out their money. The FDIC said all customers will have full access to their money by Monday.

"Established a new bank, which will open on Monday so insured depositors need not worry," Hurley said. 

The bank had $209 billion in assets and $175.4 billion in deposits at the time of failure, the FDIC said in a statement. It was unclear how many deposits were above the $250,000 insurance limit.  

"If your deposits are over $250,000 by all means take your money out," said Hurley.   

Notably, the FDIC did not announce a buyer of Silicon Valley's assets, which is typically when there's an orderly wind-down of a bank. The FDIC also seized the bank's assets in the middle of the business day, a sign of how dire the situation had become.  

In a statement released by Governor Maura Healey on Sunday, she said her office has been "closely monitoring" the situation and has been in contact with federal regulators and the White House regarding the seizure's impact on the Commonwealth.

"Our administration is actively working to support individuals and businesses affected by SVB's closure and to find solutions to help them address immediate needs, including putting supports in place to ensure that small businesses and employees do not experience significant disruptions," wrote Healey. "We will continue to be in dialogue with decision-makers and support all efforts to preserve the strength and stability of our markets and protect jobs, businesses, non-profits and our economy. We have confidence in the strength of our regional banks and banking operations."

Boston Mayor Michelle Wu also issued a statement of support on Sunday, stating that she is committed to helping Boston businesses and workers affected by the bank's failure. 

"This is a deeply distressing moment for many business leaders, entrepreneurs, nonprofits, and workers in our community, and they will not be left to fend for themselves," Mayor Wu wrote. "...In partnership with the Commonwealth, our immediate focus is helping our businesses make payroll and provide for their employees."

To find out if your bank is federally insured, visit the FDIC website.

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