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“Silicon Valley Bank Collapses After Bank Run, Biden Administration Intervenes”


Silicon Valley Bank, an iconic 40-year-old institution based in Santa Clara, California, that catered to nearly half of all U.S. tech startups backed by venture capital, collapsed on Friday after a bank run forced the Federal Deposit Insurance Corporation (FDIC) to take control of the institution.[0] It is the largest US bank to fail since the 2008 financial crisis.[1]

At the end of December 2021, Silicon Valley Bank held around $209 billion in total assets and was one of the 20 largest commercial banks in the US.[2] According to its website, the bank serviced 65 percent of “all existing start-ups and many of the most prominent venture capital firms.”[3]

SVB was particularly flexible about lending tech startups money even though they didn’t have free cash flow or much in the way of assets.[4] As a result, it had become an integral part of the financial infrastructure of the tech industry, especially startups.[1]

In order to make good on withdrawals, SVB had to sell part of its bond holdings at a steep loss of $1.8 billion, the bank said last week.[3] The announcement scared the bank’s customers, who became concerned about SVB’s stability, and consequently withdrew more money from the bank, an example of a bank run.[5]

The Biden administration took an unprecedented step, ensuring that all customers of the defunct Silicon Valley Bank would be able to access all of their funds.[6] The Federal Deposit Insurance Corporation (FDIC) usually provides up to $250,000 in coverage per account holder, per bank. However, a whopping 85% of funds held by SVB were not protected by the FDIC, meaning billions of dollars must now be paid for by the federal government.[7]

On Monday, the stock prices of other banks considered to possess similar risks to SVB significantly decreased, with First Republic Bank falling by more than 60% and Western Alliance Bancorp dropping nearly 50%.[5] Investors were afraid that other lenders, particularly those of a smaller or regional size, would experience a similar rise in withdrawals, resulting in difficulty to satisfy the redemptions.[5]

The narrative of the Silicon Valley Bank incident is simple and clear.[3] During the pandemic, startups and tech firms experienced significant gains, some of which were deposited at the Silicon Valley Bank.[8] The bank, flush with their cash, followed the standard protocol for banks and kept a portion of the money on reserve, while investing the rest into long-term Treasury bonds that offered good returns during times of low interest rates.[8]

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

1. “What is Silicon Valley Bank? The bank’s collapse, explained.”, 12 Mar. 2023,

2. “My Trade Amid SVB’s Fall? An ‘Insurance Policy’ on BofA I Hope Doesn’t Pay Off” RealMoney, 12 Mar. 2023,

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

4. “Despite rescue, Seattle startups and banks face SVB blowback” The Seattle Times, 14 Mar. 2023,

5. “After Silicon Valley Bank collapses, plenty of worries over what’s next” NPR, 14 Mar. 2023,

6. “Signature Bank’s collapse could deal a blow to cryptocurrency industry” The Washington Post, 13 Mar. 2023,

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

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

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