Musk Claims He Is “Open to the Idea” of Buying Collapsed Silicon Valley Bank

On Friday, in a recent reply to a tweet, Business Insider reports that, the CEO of Tesla and new owner of Twitter, Elon Musk, stated that he was “open to the idea” of purchasing Silicon Valley Bank. This is reportedly after the financial institution was shut down by U.S. regulators, due to a run on deposits by customers. While some social media users have supported the idea, Tesla investors expressed reservations.

On Thursday, as a result of the bank’s stock price dropping, after it announced a capital raising on Wednesday night, startup founders started taking money out of SVB. Essentially, the collapse of Silicon Valley Bank was caused, by a massive run on the bank, with customers initiating withdrawals of $42 billion this week - leaving the bank with a negative cash balance of $958 million.

This run on the bank cause the bank to be placed into Federal Deposit Insurance Corp. receivership on Friday, after the California Department of Financial Protection and Innovation (DFPI) determined the bank had been rendered insolvent. Prior to the event, the bank was reported to be in “sound financial condition,” according to the DFPI.

Here’s the summary of what happened from the DFPI’s order taking possession of the bank according to Breitbart News-

“On March 8, 2023, the Bank announced a loss of approximately $1.8 billion from a sale of investments (U.S. treasuries and mortgage-backed securities). On March 8, 2023, the Bank’s holding company announced it was conducting a capital raise. Despite the bank being in sound financial condition prior to March 9, 2023, investors and depositors reacted by initiating withdrawals of $42 billion in deposits from the Bank on March 9, 2023, causing a run on the Bank.”

“As of the close of business on March 9, the bank had a negative cash balance of approximately $958 million. Despite attempts from the Bank, with the assistance of regulators, to transfer collateral from various sources, the Bank did not meet its cash letter with the Federal Reserve. The precipitous deposit withdrawal has caused the Bank to be incapable of paying its obligations as they come due, and the bank is now insolvent.”

“Prior to its collapse, Silicon Valley Bank was the 16th largest bank by assets in the U.S. Federal Reserve data shows the bank had $209 billion in assets as of December 31, 2022.”

-Breitbart News

The idea of Musk’s involvement, was put forward to Musk, in a tweet by Min-Liang Tan, cofounder and CEO of Razer, a company that sells gaming computers and peripherals. Tan reportedly tweeted-

 “I think Twitter should buy SVB and become a digital bank.”

-Min-Liang Tan

To which Musk responded-

“I’m open to the idea.”

-Elon Musk

Supportive of the idea, one Twitter user said “what an opportunity.” However, still another Twitter user and Tesla investor named Sanjay, whose Twitter profile describes him as a  “Tesla customer and investor, bull and Elon fan,” rhetorically stated -

“And sell another $20 billion worth of $Tesla stock. No thanks!”

- Sanjay

With Tesla shares affected by Musk’s’ purchase of Twitter late last year, it’s understandable that those who have invested in Tesla heavily are a little nervous. Whether Musk jumps in or not, reportedly the FDIC evaluation and response is sure to be slow, with more than a few unhappy investors.

“Whenever you see a successful business, someone once made a courageous decision.”

-Peter F. Drucker