FDIC accidentally reveals details about Silicon Valley Bank’s biggest customers

Matt Egan
Fri, June 23, 2023

Celal Gunes/Anadolu Agency/Getty Images

The FDIC mistakenly revealed to Bloomberg News details on the biggest customers at Silicon Valley Bank, the failed bank whose depositors were rescued through emergency action by regulators.

An FDIC document posted online by Bloomberg News on Friday offers new insights into who benefited from that controversial rescue in March when SVB became the second biggest bank failure in US history. According to Bloomberg, that document was accidentally released unredacted by the FDIC in response to a Freedom of Information Act request.

After SVB suddenly collapsed, the FDIC and other federal regulators decided to make all of the bank’s customers whole, including those with more funds than the $250,000 insurance limit.

That emergency move saved not only fledgling tech startups — some of which could have been wiped out by the SVB implosion — but some heavy hitters in the tech industry, too.

For instance, leading venture capital firm Sequoia Capital, held just more than $1 billion at SVB, according to the FDIC document. Sequoia, famous for its prescient investments in PayPal, Google, Apple and other tech firms, was SVB’s fourth-biggest depositor, according to the document.

Sequoia did not respond to a request for comment.

Another major SVB customer was Kanzhun, a Beijing tech firm that runs BOSS Zhipin, China’s largest online recruitment platform. The FDIC document indicates the Chinese firm held about $903 million at SVB.

The FDIC, charged with insuring deposits at banks, apparently did not intend to release the details on SVB’s biggest customers.

According to Bloomberg, the FDIC asked the media outlet to destroy and not share the depositor list, saying it meant to “partially” withhold some details from the document “because it included confidential commercial or financial information.”

The FDIC declined to comment to CNN.

Dennis Kelleher, CEO of financial reform nonprofit Better Markets, pushed back on the notion that the details should be hidden from public view.

“This is not, as regulators claim, ‘confidential commercial or financial information.’ It might be embarrassing information, but the American people have a right to know so there can be some oversight and accountability for regulators’ actions,” Kelleher told CNN in an email.

SVB’s biggest depositor was Circle Internet Financial, the stablecoin firm behind USD Coin. The FDIC document shows that Circle held $3.3 billion at SVB, a figure that the stablecoin company previously disclosed

The streaming platform Roku held $420 million at SVB, according to the FDIC document. Hours after SVB failed, Roku warned investors it held about $487 million — roughly a quarter of its total cash — with the bank and did not know if it would be able to recover the funds.

US officials have defended the rescue of SVB depositors as the necessary step to prevent panic from spreading and imperiling the broader financial system.

But critics of the US response to the bank failures have argued the SVB rescue amounted to a bailout, one that would help foreign companies.

“Americans will also be paying to guarantee the deposits of many Chinese companies that were SVB customers,” former Vice President Mike Pence wrote in an op-ed. “We have to stop the insanity of bailout out failing businesses.”

The FDIC estimates the SVB failure will cost its deposit insurance fund $16.1 billion. The agency plans to recoup those losses by assessing fees on banks.

“The American people are going to pay the $16 billion bill to prevent the collapse of Silicon Valley Bank,” Kelleher, the Better Markets CEO, said. “Those banks are not going to cut their executives’ bonuses…They are going to recover those costs in higher fees and rates for everyday banking services and products for Main Street Americans.”

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