Twitter and Tesla CEO Elon Musk proved to the world that he’s not afraid to step in and effect major change.
That’s why when he hinted at the possibility of being open to the idea of buying the failed Silicon Valley Bank (SVB), the news quickly made headlines. According to Breitbart, Musk made mentioned the idea in a tweeted reply to someone who had suggested the possibility.
The bank, one of the largest in America, failed this week in a matter of 48 hours after news was revealed that it was seeking several billion in fundraising to shore up its balance sheet.
SVB served nearly half of all Silicon Valley start-ups, with a vast majority of the deposits being uninsured by the FDIC.
“Open to the idea”
Breitbart explained the conversation that led to headlines regarding Musk’s potential interest in saving the bank.
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
Many agreed, even offering alternatives such as possibly converting SVB into a credit union. Others weren’t so hot on the idea, especially Tesla investors, who fear Musk would sell off more Tesla stock to shore up his purchasing power to acquire the banking institution.
And sell another $20 billion worth of $Tesla stock. No thanks!
— Sanjay (@sanssoli) March 11, 2023
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.
Federal regulators stepped in on Friday and shuttered the bank.
After SVB announced that it was attempting to raise capital on Wednesday night, depositors made a run on the bank over the next 24 hours, cleaning it out and leaving it with a -$958 million balance.
It didn’t take long for federal regulators to step in and call it what it was: completely insolvent. The depositors who are eligible to recoup funds under FDIC’s program will be relieved that such disbursements could start as soon as Monday.
But a vast majority of the banks nearly $200 billion in deposits, mostly from commercial clients, was not covered by FDIC insurance, forcing President Joe Biden’s Fed and Treasury Department to hold discussions on whether or not to save it.
Only time will tell if SVB gets a bailout, which looks likely, but either way, it’s a giant mess that could spread far and wide if the right measures aren’t taken immediately.