The Federal Reserve Board recently disclosed a consent order against Silvergate Capital Corporation and its subsidiary Silvergate Bank , providing the necessary regulatory supervision for the financial institution’s voluntary self-liquidation.
However, Silvergate Capital Corporation and Silvergate Bank, both garrisoned in La Jolla, California, are now informed to follow suit their former announcement on self-liquidation plan under the close supervision of the Federal Reserve. The main intent of the Board’s order is to make sure preservation of the Deposit Insurance Fund and to protect the rights of the bank’s depositors during the self-liquidation process.
Silvergate is expressly restricted from carrying out certain financial activities without prior regulatory approval. These activities include making capital distributions and the dissipation of cash assets, ensuring a smooth and secure wind-down process for all involved parties.
The Federal Reserve is not acting alone in this move. It’s taking these actions in coordination with the Department of Financial Protection and Innovation of the State of California. As the state chartering authority and state supervisor of Silvergate, the Department has a keen interest in overseeing the self-liquidation process in a manner that safeguards the interests of Silvergate’s depositors and the broader financial system.
The decision is a welcome development in the unfolding saga of Silvergate Bank, underscoring the Federal Reserve’s commitment to make sure the stability and security of the nation’s financial institutions. The joint actions taken by the Federal Reserve and the State of California highlight the rigorous regulatory framework in place to protect depositors and maintain confidence in the banking sector.