On Friday, Silicon Valley Bank, a lender popular amongst technology companies, experienced a catastrophic failure after two days of turmoil, resulting in it becoming the second-largest bank failure in American history. By the morning, America’s sixteenth largest bank, which had around $175 billion in deposits, had vanished.[0] Management mistakes were the cause of it occurring.[0] Totaling around $42 billion, a quarter of all deposits were attempted to be taken out by customers, creating a bank run of the 21st century.[0]
Friday’s collapse of Silicon Valley Bank is the second largest bank failure in U.S. history and the first since the 2008 financial crisis. The majority of SVB’s deposits surpass the FDIC-insured limit, which could potentially lead to the loss of funds or a complete loss of the money for those individuals.[1]
The Federal Deposit Insurance Corp. (FDIC) took over Silicon Valley Bank in California and put it into receivership after the state’s banking regulators shut it down.[2] The Federal Deposit Insurance Corporation (FDIC) is serving as a receiver, typically meaning that it will convert the bank’s assets into cash to reimburse its customers, including both depositors and creditors. The Silicon Valley Bank, the California bank subsidiary of SVB Financial Group (SIVB), was shut down.[3] The California Department of Financial Protection and Innovation appointed the Federal Deposit Insurance Corporation (FDIC) as a receiver to the bank, resulting in the move.
The Federal Deposit Insurance Corporation (FDIC), an independent federal agency which provides insurance for bank deposits and supervises financial institutions, has announced that all insured depositors will have unrestricted access to their insured deposits by Monday morning at the latest. Within the next week, it promised to provide an “advance dividend” to uninsured depositors.[4] All insured depositors will have full access to their insured deposits no later than Monday.
In his remarks on Monday, President Joe Biden made it clear that the public will not suffer any losses as a result of the government’s involvement with Silicon Valley Bank.[5] Sen. Elizabeth Warren of Massachusetts voiced her doubts in a Monday morning op-ed, writing, “We’ll see if that’s true.”[5]
The failure of Silicon Valley Bank has caused a great deal of doubt and total perplexity concerning the destiny of Big Tech and the overall economy.[6] The consequences of the bank’s failure are uncertain, but they are likely to exacerbate the difficulties that the startup industry is already facing when it comes to obtaining capital.[5]
0. “Who Killed Silicon Valley Bank? – WSJ” The Wall Street Journal, 12 Mar. 2023, https://www.wsj.com/articles/who-killed-silicon-valley-bank-interest-rates-treasury-federal-reserve-ipo-loan-long-term-bond-capital-securities-startup-jpmorgan-bear-stearns-lehman-brothers-b9ca2347
1. “Silicon Valley Bank Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC” The Intercept, 12 Mar. 2023, https://theintercept.com/2023/03/11/silicon-valley-bank-used-former-mccarthy-staffers-to-weaken-regulations-lobby-fdic/
2. “Why Democrats blame Trump, Dodd-Frank rollback in SVB collapse” Business Insider, 13 Mar. 2023, https://www.businessinsider.com/silicon-valley-bank-collapse-what-is-dodd-frank-trump-rollback-2023-3
3. “My Trade Amid SVB’s Fall? An ‘Insurance Policy’ on BofA I Hope Doesn’t Pay Off” RealMoney, 12 Mar. 2023, https://realmoney.thestreet.com/investing/stocks/my-bank-trade-an-insurance-policy-on-bofa-i-hope-doesn-t-pay-off-16118056
4. “Takeaways from America’s second-largest bank failure” CNN, 11 Mar. 2023, https://www.cnn.com/2023/03/11/business/svb-collapse-roundup-takeaways/index.html
5. “The tech industry avoided an ‘extinction-level event,’ but it’s not unscathed” CNN, 13 Mar. 2023, https://www.cnn.com/2023/03/13/tech/tech-industry-relief-silicon-valley-bank/index.html
6. “Silicon Valley Bank collapse could be a big win for Big Tech” MSNBC, 13 Mar. 2023, https://www.msnbc.com/the-reidout/reidout-blog/silicon-valley-bank-collapse-big-tech-rcna74678