Employees stand outside the defunct Silicon Valley Bank (SVB) headquarters on March 10, 2023 in Santa Clara, California.

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Big names in Silicon Valley and the financial sector are publicly calling on the federal government to pressure another bank to take over Silicon Valley Bank’s assets and liabilities after financial institutions failed on Friday.

The Federal Deposit Insurance Corporation (FDIC) will cover up to $250,000 per depositor and may begin paying those depositors as early as Monday.

But the vast majority of SVB’s customers were companies that had more than that deposited in the bank. As of December, more than 95% of the bank’s deposits were uninsured, according to statutory registrations. Many of these depositors are startups, and many are worried they won’t be able to get paid this month, which in turn could trigger a broad wave of failures and layoffs in the tech industry.

Investors are concerned that these failures could reduce confidence in the banking sector, particularly mid-sized banks with under $250 billion in deposits. These banks are not considered “too big to fail” and do not have to undergo regular stress tests or other safety valve measures enacted in the wake of the 2008 financial crisis.

Venture capitalist and former technology executive David Sacks urged the federal government to pressure another bank to buy SVB’s assets, writes on Twitter“Where is Powell? Where is Yellen? Stop this crisis NOW. Announce that all depositors will be safe. Place SVB with a top 4 bank. Do this before Monday opens or there will be contagion and the crisis will spread.”

VC Mark Suster agreed, tweeting: “I suspect this is what they’re working on. I expect statements by Sunday. We’ll see. I sure hope so or Monday will be brutal.”

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Investor Bill Ackman made a similar argument in one long tweetwrites, “The government has about 48 hours to correct a soon-to-be irreversible mistake. By allowing @SVB_Financial to fail without protecting all depositors, the world has woken up to what an uninsured deposit is – an unsecured illiquid claim on a failed bank. Absent @jpmorgan @citi or @American Bank acquires SVB before the opening on Monday, a prospect that I think is unlikely, or that the government does not guarantee all of SVB’s deposits, the giant sucking sound you will hear will be a withdrawal of basically all uninsured deposits from everyone except those ‘ of systemically important banks (SIBs).”

Benchmark Partner Eric Vishria wrote“If SVB depositors are not made whole, then corporate boards must insist that their companies only use two or more of the four BIG banks. Which will crush smaller banks. AND make the too-big-to-fail problem much worse.”

Since its inception almost 40 years ago, SVB has become a central part of the economy of the technology industry, especially for startups and the VCs who invest in them. The company was known for extending banking services to start-ups that would have struggled to get banking services elsewhere before generating stable cash flow. But the company itself faced cash flow problems this year as seed funding dried up and its own assets locked up in long-term bonds.

The company surprised investors on Wednesday with news that it needed to raise 2.25 billion dollars to strengthen its balance sheet and that it had sold all of its bonds available for sale at a loss of $1.8 billion. The assurances from the bank’s executives were not enough to stop a run, and depositors withdrew more than $42 billion from end of day Thursdaysetting up the second largest bank failure in US history.

Many in the tech world blamed venture capital firms for fueling the flight, as many told their portfolio companies to put their money in safer places after SVB’s announcement on Wednesday.

“This was a hysteria-induced bank run caused by VCs,” Ryan Falvey, a fintech investor at Restive Ventures, told CNBC on Friday. “This will go down as one of the ultimate cases of an industry cutting off its nose to spite its face.”

Observers cry out the irony that some venture capital firms with notoriously libertarian free-market attitudes are now calling for a bailout. For example, reactions to Sacks’ tweet included statements such as “Excuse me my lord. Suddenly the government is the answer?!?” and “We capitalists want socialism!

Some politicians opposed any bailout, with rep. Matt Gaetz, R-Fla., tweeting“If there is an attempt to use taxpayer money to bail out Silicon Valley Bank, the American people can count on me to be there and lead the fight against it.”

But financier and former Trump communications director Anthony Scaramucci claimed“It’s not a political decision to save SVB. Don’t make the Lehman mistake. It’s not about rich or poor who benefits, it’s about stopping the contagion and protecting the system. Make depositors whole or expect lots of tragically unintended consequences .”

Hugh Son and Ari Levy contributed to this story.

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