Top Conservative Entrepreneur Had Massive Amount ‘Stuck’ In Silicon Valley Bank During Collapse

Peter Thiel, the PayPal co-founder and prominent conservative businessman, maintained a $50 million account with Silicon Valley Bank while the company collapsed.

In order to increase confidence in America’s financial system, the Federal Deposit Insurance Corporation took over management of $212 billion worth assets held by Silicon Valley Bank. Thiel didn’t move his balance to the company, even though Founders Fund (a venture capital firm he founded) advised clients that they withdraw their funds as soon as possible.

“I had $50 million of my own money stuck in SVB,” Thiel stated in an interview with Financial Times that he didn’t remove his funds as he believed the bank would fail. Thiel’s account was temporarily frozen by the FDIC when it took control of the bank, but it is now available after the Federal Reserve provided emergency funds Sunday to depositors.

Silicon Valley Bank announced last Wednesday a share sale to pay for losses from the liquidation long-term assets of a $21 million bond portfolio. A report by Axios claims that Founders Fund executive had made calls and moved funds out of the bank the following morning. The executives advised portfolio companies to do the same.

Thiel wasn’t involved in the discussions but news of the effort spread through the industry. “Thursday morning it was clear we were in the middle of a bank run, and we reacted in line with our fiduciary duties,” Founders Fund CFO Neil Ruthven told Axios.

On Tuesday, several prominent venture capital firms announced that they would refund funds to Silicon Valley Bridge Bank. The new entity was created by the FDIC. They also stated that they would recommend their portfolio companies do so. Tim Mayopoulos (CEO of Silicon Valley Bridge Bank), was appointed to succeed Greg Becker. He sent a memo out to venture capital clients. “the number one thing you can do to support the future of this institution is to help us rebuild our deposit base, both by leaving deposits with Silicon Valley Bridge Bank and transferring back deposits that left over the last several days.”

According to CNN, large banks like Citigroup and Wells Fargo have seen a flood of new deposits. This is because customers are worried about moving their money away from regional banks. A number of entities are in discussions with First Regional Bank to assist it, which is heavily involved as a wealth manager and has many customers with deposits above the $250,000 threshold. This raises concerns that the FDIC could lead to a consolidation wave in the financial services industry.

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Silicon Valley Bank held deposits of nearly 50% of venture-backed technology and healthcare firms in the United States. The FDIC insured $250,000 for most of these deposits. Silicon Valley Bank’s deposits were guaranteed by regulators so that any bank run-prone areas, which is roughly half of the total financial system with more than $250,000 in deposits, could be protected.

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