Silicon Valley Bank failure should not lead to contagion ‘as long as we remain calm,’ says Jefferies Financial CEO

The best solution for solving the failure of SVB Financial Groupof Silicon Valley Bank “It’s going to be a merger that’s going to happen now,” he said Jefferies Financial Group Inc. Chief Executive Officer Rich Handler, who said he does not see a return to the 2008 global financial crisis emerging from last week’s events.

“In 2008, almost the entire financial system was overleveraged and flooded with misbranded complex illiquid assets,” Handler and Jefferies President Brian Friedman said in a LETTERS to clients and employees of their New York-based investment bank. “This is not the case today. Our sense of the range of institutions examined is that any issues are finite and idiosyncratic – that is, they do not threaten the entire system and do not necessarily lead to endless conflict, as long as we remain calm down.

the The Federal Deposit Insurance Corp. An auction process began Saturday for Silicon Valley Bank, with final bids Sunday afternoon, according to people familiar with the matter. The FDIC is seeking a quick deal, but a winner may not be known until late Sunday, according to one person, who asked not to be identified because the matter is not public. No final decision has been made and it is possible that no agreement will be reached, the people said.

“The best solution is a merger that is happening now (and we should all be happy if it happens and in our dreams no past problems should bother any savior), but more is needed ,” Handler and Friedman wrote. “Short of an outright bailout that would border on the miraculous, there must be a clear process for how people beyond the $250,000 insurance threshold will have access to their money.”

Deposits are FDIC insured up to at least $250,000 per depositor, per insured bank, per ownership category. At Silicon Valley Bank, north of 93% of bank deposits are uninsured.

“If we do the math (and we acknowledge that we’re out there looking and could be wrong), it appears realistic that any deterioration in deposits should be relatively modest,” Handler and Friedman said.

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