Mark Cuban wants the Fed to buy Silicon Valley Bank debt, pronto. Failure to do so, he believes, will shake confidence in the financial sector—and hurt tech startups and their employees.
On Friday, the bank failed after an open bank that saw investors and depositors try to withdraw $42 billion on Thursday alone. Many are now worried about the consequences of next week.
One common concern is that many of the tech businesses associated with SVB will not be able to pay their employees, starting next week.
Cuba tweeted Friday night, “The Fed should IMMEDIATELY buy all the securities/debt the bank has at par, which should be enough to cover most of the deposits.”
He shared the tech entrepreneur’s acknowledgment of the difficulties caused by bank failures, add to it“That’s what the Fed needs to think about.”
In his statement, Champ Bennett, co-founder of a small AI video production startup called Capsule, tweeted: “It’s a bit embarrassing to go public, but I have an obligation to tell our story to fight some misconceptions… 30 days ago, our small team celebrated the closing of a $5M fundraiser that could make a bet for the future. Today we can’t accessing the funds because SVB died. What happened next is anyone’s guess, but it doesn’t look good.”
Cuban himself was once a cofounder of a small video-oriented startup. That venture, Broadcast.com, was eventually acquired by Yahoo for $5.7 billion during the dot-com boom.
The tragedy of SVB’s failure, he tweetedit’s “not the rich who took a hit. Thousands of companies that borrowed from the SVB and had to keep money in the SVB. The entrepreneurs and their employees and their sellers feel hurt. And they are the Fed that has to protect.
Millionaire added“And for the record, I don’t have any personal funds there, although some of my portfolio companies do. Probably all about 8 to 10 million dollars. So I can help them. But that’s another 200b and how many employees and vendors? I concerned about them.”
The assets of SVB are currently under the control of the Federal Deposit Insurance Corporation. Customers will have access to insured deposits on Monday, the agency said, but FDIC insurance is capped at $250,000. Many startups stay far longer than with banks.
The FDIC said it will pay uninsured deposits with an “advance dividend in the coming weeks,” but it’s unclear what the amount will be and when it will come. If it’s too small, Cuba warned on Twitter Spaces on Friday night, there will be a contagion effect.
Greg Martin, founding partner of investment firm Liquid Stock, told Bloomberg that in the worst-case scenario next week, tens of thousands of workers will not be paid.
Former Treasury Secretary Larry Summers also attended. “There are dozens, if not hundreds, of startups that plan to use that cash to meet next week’s payroll,” he said on Bloomberg Television. Wall Street Week. “If it can’t happen, the consequences will be quite severe for our innovation system.”
Elon Musk, for his part, indicated on Friday night that he was “open to the idea” of buying Silicon Valley Bank as he laid the groundwork for Twitter payments.
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