Former Federal Deposit Insurance Corp. chair Sheila Bair says the smoothest way to handle Silicon Valley Bank's failure is to find a buyer.

SVB, the nation's 16th-largest bank, failed after depositors hurried to withdraw money this week amid anxiety over the bank's health. It was the second biggest bank failure in U.S. history after the collapse of Washington Mutual in 2008.

"In almost all of our bank failures during the great financial crisis — we had about 400 of them — we did purchase an assumption; we sold a failed bank to a healthy bank. And usually, the healthy acquirer would also cover the uninsured because they wanted the franchise value of these large depositors. So optimally, that's the best outcome," Bair said Sunday during an appearance on NBC News' "Meet the Press."

Important: Reagan’s OMB Director first warned of major debt and bank crisis to happen in 2023 in new bestseller, advises 4 ways to protect cash – See Emergency Details Here Now!

"The problem is this was a rush; this was a liquidity failure. It was a bank run, so they didn't have time to prepare to market," Bair added.

"The banks are having to do that now and playing catch-up."

But regulators are struggling to find a buyer for the failed bank's assets, according to a source who spoke with CNBC.

PNC Financial Group, which sent an initial notice of interest to the FDIC for a deal for SVB, informed the agency Saturday it was not moving forward after conducting initial due diligence.

Nearly half of the U.S. technology and health care companies that went public last year after getting early funding from venture capital firms were SVB customers, according to the bank's website.

The bank also boasted of its connections to leading tech companies such as Shopify, ZipRecruiter, and one of the top venture capital firms, Andreesson Horowitz.

"This is an extinction-level event for startups," said Garry Tan, CEO of Y Combinator, a startup incubator that launched Airbnb, DoorDash, and Dropbox and has referred hundreds of entrepreneurs to the bank.

Tan estimated that nearly one-third of Y Combinator's startups will not be able to make payroll at some point in the next month if they cannot access their money.

Internet TV provider Roku was among casualties of the bank collapse. It said in a regulatory filing Friday that about 26% of its cash — $487 million — was deposited at SVB.

Roku said its deposits with SVB were largely uninsured, and it didn't know "to what extent” it would be able to recover them.

Information from the Associated Press was used in this report.

Important: Reagan’s OMB Director first warned of major debt and bank crisis to happen in 2023 in new bestseller, advises 4 ways to protect cash – See Emergency Details Here Now!

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