Silicon Valley Bank Collapse Creates Ripple Effect Across US Financial Industry

The downfall of Silicon Valley Bank, the second-largest bank failure in U.S. history, has caused reverberations throughout the American financial sector.[0] Over the past week, depositors have been rushing to withdraw their funds due to concerns surrounding the bank’s balance sheet. On Friday, California regulators stepped in, shutting down the bank and appointing the Federal Deposit Insurance Corporation (FDIC) as receiver.[1]

The FDIC has announced that all insured depositors will have full access to their insured deposits no later than Monday morning, with an “advance dividend” to be paid out to uninsured depositors within the next week.[2] The FDIC and Federal Reserve have also pledged to provide funding to other banks to ensure that they can meet the needs of all their depositors.[3]

However, Silicon Valley Bank’s deposits had been dropping for four straight quarters due to tech valuations crashing from their pandemic-era highs.[4] Nearly 93 percent of SVB’s deposits were not insured, and one-third of their customers had deposits in excess of the FDIC insurance limit of $250,000.[5] This led to a tripling of deposits at the regional bank, which specializes in the industry’s fledgling companies, from $62 billion at the end of 2019 to $189 billion at the end of 2021.[6]

In order to make good on those withdrawals, SVB had to sell part of its bond holdings at a steep loss of $1.8 billion.[1] To compensate for this, the bank arranged for a public offering of the bank’s shares, led by Goldman Sachs, with a large investment from General Atlantic.[4]

The Biden administration has pushed back on the idea that this was a bailout, with Treasury Secretary Janet Yellen emphasizing in remarks Monday that “no losses will be borne by the taxpayers.”[7] However, it’s unclear how the aftershocks of the bank’s collapse will add to the startup industry’s growing challenges accessing capital.[8]

The FDIC has set up a $25 billion fund to protect deposits, and the Treasury, Federal Reserve and Federal Deposit Insurance Corporation have announced a backstop to “fully protect all depositors.”[9] By the end of 2022, Silicon Valley Bank had an approximate total of $209 billion in assets and $174.5 billion in deposits, per the agency.[10]

0. “Takeaways from America’s second-largest bank failure” CNN, 11 Mar. 2023,

1. “What to know about the spectacular collapse of Silicon Valley Bank” NPR, 10 Mar. 2023,

2. “There’s a deeper story to Silicon Valley Bank’s failure. What can we learn from it?” The Guardian, 13 Mar. 2023,

3. “Treasury, regulators unveil bank rescue plan to stem crisis” POLITICO, 13 Mar. 2023,

4. “The End of Silicon Valley (Bank) – Stratechery by Ben Thompson” Stratechery by Ben Thompson, 13 Mar. 2023,

5. “Silicon Valley Bank Collapse Puts CFOs on Notice”, 12 Mar. 2023,

6. “Silicon Valley Bank’s failure, the government’s depositor rescue, and venture capitalists’ incredible tantrum.” Slate, 13 Mar. 2023,

7. “With Silicon Valley Bank depositors protected, let the bailout debate begin” Axios, 13 Mar. 2023,

8. “The tech industry avoided an ‘extinction-level event,’ but it’s not unscathed” CNN, 13 Mar. 2023,

9. “The Silicon Valley Bank Bailout Didn’t Need to Happen” The American Prospect, 13 Mar. 2023,

10. “PR-16-2023 3/10/2023” FDIC, 12 Mar. 2023,