The Federal Deposit Insurance Corp. stuck to its guns and didn’t offer bailouts to keep two lenders from collapsing. Instead, it struck deals that included millions of dollars of sweeteners for the acquiring banks that sent their stocks soaring.
In the case of Silicon Valley Bank, which collapsed earlier this month, the headline number showed the FDIC offering First Citizens BancShares Inc. a hefty discount to buy the lender. But the agency also tossed in a $70 billion credit line and agreed to cover First Citizens’ losses in excess of $5 billion on commercial loans for the next five years, and extended $35 billion of borrowings to the bank in the form of a note.
