Collapse of Silicon Valley Bank: FDIC Promises to Cover Deposits Up to $250,000

Silicon Valley Bank, a financial partner of the innovation economy for nearly half of all US venture-backed startups, collapsed on Friday after facing a sudden bank run and capital crisis.[0] The Federal Deposit Insurance Corporation (FDIC) appointed itself the receiver, shutting down the institution which ranked as the 16th-largest bank in the US.[1]

The FDIC has promised to cover up to $250,000 per depositor, while anything above that is not promised back and likely lost.[2] SVB catered to tech startups and venture-capital firms, and many of them had large uninsured deposits.[3] This has sparked broad concerns about how depositors can retrieve the rest of their funds, showing that failure cannot be ringfenced if it also increases risk.[2]

The collapse of SVB is being blamed on a mismatch between assets and liabilities.[4] The bank purchased long-duration bonds, which slumped in price after the Federal Reserve hiked interest rates from nearly zero to upwards of 4.5% in the space of a year.[3] It also held a large volume of uninsured deposits, and had a concentrated customer base of cash-hungry, venture-capital backed companies.[3]

However, despite this, analysts and economists largely dismissed the notion that SVB’s woes marked a systemic problem in the banking system.[5] In order to calm markets, the Treasury Department, Federal Reserve, and FDIC announced jointly on Sunday that all depositors of Silicon Valley Bank would have access to all of their money starting Monday, and that the US banking system remains resilient and on a solid foundation.[0]

The Fed’s Bank Term Lending Program will provide loans of up to one year in exchange for securities the Fed will value at par.[6] The central bank stated that, should the need arise, it has additional resources beyond the collateral; this likely indicates that some of the securities may be damaged.[6] Analysts are hopeful that this will be enough to stop any contagion from spreading and taking down more banks, but there is no guarantee this will work.[6]

0. “Fallout from Silicon Valley Bank collapse to dominate Capitol Hill” The Hill, 13 Mar. 2023,

1. “Yellen rules out bailout for Silicon Valley Bank: “We’re not going to do that again”” CBS News, 12 Mar. 2023,

2. “Treasury Secretary Janet Yellen says U.S. government won’t bail out Silicon Valley Bank” CNBC, 12 Mar. 2023,

3. “‘Big Short’ Michael Burry: SVB collapse like dot-com, housing crashes” Markets Insider, 13 Mar. 2023,

4. “SVB’s Depositors Were Bailed Out. Why It’s the Right Move.” Barron’s, 13 Mar. 2023,

5. “What a rescue for SVB depositors means for the stock market and interest rates” MarketWatch, 13 Mar. 2023,

6. “Gundlach, Ackman Weigh Fed’s US Bank Rescue Impact on Markets” Yahoo News, 13 Mar. 2023,