Washington — The Justice Department has opened an investigation into the circumstances surrounding the collapse of Silicon Valley Bank (SVB), days after it was taken over by federal regulators to stem a bank run that threatened to spread across the U.S. banking industry.
Federal law enforcement officials on Tuesday confirmed the investigation into the bank’s collapse, and the probe is said to be in its early stages. The officials spoke to CBS News on the condition of anonymity due to the sensitive nature of the investigation, which was first reported by the Wall Street Journal. The Justice Department declined to comment.
California regulators took control of SVB last Friday after depositors scrambled to withdraw tens of billions of dollars in deposits over fears that the bank could become insolvent. The spreading panic prompted regulators in New York to seize another institution, Signature Bank, on Sunday.
The Federal Deposit Insurance Corporation (FDIC) assumed control of both banks and said Sunday that all depositors would be made whole, including those whose deposits exceeded the $250,000 limit on funds backed by the federal government. The FDIC used an exemption in federal law that allows the government to insure deposits above the limit if failing to do so would pose a broader risk to the economy.
SVB’s failure was the second-largest bank collapse in U.S. history and the largest since the global financial crisis in 2008. The bank was the 16th largest in the U.S. with $210 billion in assets.
President Biden and his aides have sought to reassure Americans about stability in the banking system, and the president vowed to get to the bottom of what caused the collapse.
“There are important questions of how these banks got into these circumstances in the first place,” Mr. Biden said in remarks on Monday. We must get the full accounting of what happened and why [so] those responsible can be held accountable. In my administration, no one, in my view, no one is above the law.”
Alain Sherter contributed reporting.