The Federal Reserve and California’s Department of Financial Protection and Innovation (DFPI) have issued a joint consent order with Silvergate Capital and Silvergate Bank for its self-liquidation announced on March 8.
The consent order requires a voluntary self-liquidation plan be approved by supervisors from DFPI and the Federal Reserve Bank of San Francisco which, at a minimum, maintains sufficient staffing and operational resources during the self-liquidation process and ensures that Silvergate continues to monetize and recover on its loans, securities, and other assets in a manner that prioritizes and protects depositors’ finds.
The plan must also have Silvergate reduce its liabilities and provide payment and provision to creditors in an orderly manner, ensure the books and records of the bank are adequately maintained, and otherwise protect customers and ensure the bank is able to comply with any and all administrative or judicial orders or other agreements with regulatory authority.
The consent order prohibits Silvergate from engaging in any paying of dividends, share repurchasing, or any other capital distribution in respect to common or preferred shares, or other instruments, without prior written approval from Fed and DFPI supervisors.
Silvergate is prohibited from engaging in any changes of directors or senior executive officers without first requesting and obtaining a non-disapproval from DFPI. Silvergate also is restricted from issuing “golden parachute” payments under Federal Deposit Insurance Corp. regulations.