SVB Financial accuses FDIC of ‘improper action’ to prevent firm from accessing $2 billion in cash
- The parent company of the Silicon Valley bank said it could not access the $2 billion deposited in the collapsed bank.
- SVB Financial filed for bankruptcy on Friday.
- Now it is accusing federal regulators of taking “unfair actions” to prevent it from accessing its cash.
Recent bankruptcy documents reflect an ongoing battle between the Silicon Valley bank’s parent company and US federal regulators.
SVB Financial Group, SVB’s former parent company, said it could not access $2 billion in cash deposited in the collapsed bank seized by the Federal Deposit Insurance Corporation.
Lawyers for SVB Financial said at the group’s first bankruptcy hearing in Manhattan on Tuesday that the FDIC took “improper actions” to prevent it from accessing its cash, according to a Reuters report.
James Bromley, the financial group’s lawyer, said during the hearing, “Not only has the bank been taken, but all the cash has been taken.”
The lawyers also said the FDIC stopped communicating with the financial group and instructed SVB’s successor to stop transfers made by SVB Financial to other accounts, the WSJ previously reported.
Lawyers said SVB Financial lost access to its deposits the day before it filed for bankruptcy protection. The group made the Chapter 11 bankruptcy filing last Friday, a week after regulators shut down SVB in the biggest US bank failure since 2008.
But an attorney for the FDIC clapped back against the claims during Tuesday’s court hearing, saying nothing improper was being done by the regulator.
“There was nothing wrong with trying to freeze accounts and protect deposits,” said Kurt Gwenn, an attorney for the FDIC.
The now-collapsed California-based bank made up more than $15.5 billion of SVB Financial’s total assets of $19.7 billion — making it the group’s biggest asset, per Reuters.