{"id":2316,"date":"2023-03-15T04:03:03","date_gmt":"2023-03-15T09:03:03","guid":{"rendered":"https:\/\/embarrdowns.com\/the-collapse-of-silicon-valley-bank-a-major-blow-to-the-tech-industry\/"},"modified":"2023-03-15T04:03:03","modified_gmt":"2023-03-15T09:03:03","slug":"the-collapse-of-silicon-valley-bank-a-major-blow-to-the-tech-industry","status":"publish","type":"post","link":"https:\/\/embarrdowns.com\/the-collapse-of-silicon-valley-bank-a-major-blow-to-the-tech-industry\/","title":{"rendered":"‘The Collapse of Silicon Valley Bank: A Major Blow to the Tech Industry’"},"content":{"rendered":"

In a time of economic uncertainty, the collapse of Silicon Valley Bank (SVB) is a major blow to the tech industry.[0]<\/a><\/sup> On March 8, SVB\u2019s parent company, SVB Financial Group, announced it had sold $21 billion of assets at a $1.8 billion loss, and was going to sell $1.75 billion worth of shares to help plug that hole.[1]<\/a><\/sup> This caused panic among SVB\u2019s clients, leading to a bank run and leading to the Federal Deposit Insurance Corporation (FDIC) taking control of the bank.<\/p>\n

SVB had a business model that was heavily concentrated in the tech industry, both venture capital and private equity, and so was more exposed to potential losses than other banks.[2]<\/a><\/sup> As a result, when the tech industry started to falter, it very quickly became a problem for the bank.[2]<\/a><\/sup> Moreover, because the FDIC normally only insures up to $250,000 of deposits, many customers who had more than that in SVB were in a bind.[3]<\/a><\/sup><\/p>\n

In response, the Treasury Department, the Federal Reserve, and the FDIC announced that they were taking \u201cdecisive actions\u201d to protect the economy and shore up confidence in the banking system.[4]<\/a><\/sup> The representatives promised that all of SVB\u2019s depositors would be able to access their funds the following day, not just those with deposits up to the FDIC-guaranteed $250,000.[4]<\/a><\/sup> On Sunday, New York regulators closed Signature Bank, which had begun offering crypto services, and the federal government stated that all depositors’ funds would be safeguarded.[4]<\/a><\/sup> The Fed said it was also going to open up a facility to make funding available for other financial institutions in the form of one-year loans to try to limit contagion across the banking sector and to stave off other bank runs.[4]<\/a><\/sup><\/p>\n

The collapse of SVB is the second-largest bank failure in US history and the largest since Washington Mutual went under in 2008.[5]<\/a><\/sup> It has sent shock waves across the tech sector, and while smaller depositors are safe, many customers who had more money in the bank have been left in a difficult situation. The FDIC, Treasury Department and the Fed have taken measures to protect the economy and shore up confidence in the banking system, but the long-term effects of the collapse of SVB are still to be seen.<\/p>\n

0. <\/span>“Silicon Valley Bank failure could wipe out ‘a whole generation of startups'” NPR, 11 Mar. 2023, https:\/\/www.npr.org\/2023\/03\/11\/1162805718\/silicon-valley-bank-failure-startups<\/a><\/a><\/p>\n

1. <\/span>“Silicon Valley Bank’s failure, the government’s depositor rescue, and venture capitalists’ incredible tantrum.” Slate, 13 Mar. 2023, https:\/\/slate.com\/technology\/2023\/03\/silicon-valley-bank-rescue-venture-capital-calacanis-sacks-ackman-tantrum.html<\/a><\/a><\/p>\n

2. <\/span>“What is Silicon Valley Bank? The bank\u2019s collapse, explained.” Vox.com, 15 Mar. 2023, https:\/\/www.vox.com\/technology\/23634433\/silicon-valley-bank-collapse-silvergate-first-republic-fdic<\/a><\/a><\/p>\n

3. <\/span>“Silicon Valley Bank Bailout is Socialism for the Rich” Washington Free Beacon, 13 Mar. 2023, https:\/\/freebeacon.com\/columns\/silicon-valley-bank-bailout-is-socialism-for-the-rich<\/a><\/a><\/p>\n

4. <\/span>“Silicon Valley Bank bailout: Did the government just bail out SVB and Signature?” Vox.com, 13 Mar. 2023, https:\/\/www.vox.com\/money\/2023\/3\/13\/23638417\/svb-bank-bailout-signature-fed-fdic-treasury-janet-yellen<\/a><\/a><\/p>\n

5. <\/span>“Gavin Newsom hides ties to failed Silicon Valley Bank in statement praising Biden’s bailout” Fox News, 15 Mar. 2023, https:\/\/www.foxnews.com\/politics\/gavin-newsom-hides-client-failed-silicon-valley-bank-statement-praising-bailout<\/a><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In a time of economic uncertainty, the collapse of Silicon Valley Bank (SVB) is a major blow to the tech industry.[0]<\/a><\/sup> On March 8, SVB\u2019s parent company, SVB Financial Group, announced it had sold $21 billion of assets at a $1.8 billion loss, and was going to sell $1.75 billion worth of shares to help plug that hole.[1]<\/a><\/sup> This caused panic among SVB\u2019s clients, leading to a bank run and leading to the Federal Deposit Insurance Corporation (FDIC) taking control of the bank.<\/p>\n

SVB had a business model that was heavily concentrated in the tech industry, both venture capital and private equity, and so was more exposed to potential losses than other banks.[2]<\/a><\/sup> As a result, when the tech industry started to falter, it very quickly became a problem for the bank.[2]<\/a><\/sup> Moreover, because the FDIC normally only insures up to $250,000 of deposits, many customers who had more than that in SVB were in a bind.[3]<\/a><\/sup><\/p>\n

In response, the Treasury Department, the Federal Reserve, and the FDIC announced that they were taking \u201cdecisive actions\u201d to protect the economy and shore up confidence in the banking system.[4]<\/a><\/sup> The representatives promised that all of SVB\u2019s depositors would be able to access their funds the following day, not just those with deposits up to the FDIC-guaranteed $250,000.[4]<\/a><\/sup> On Sunday, New York regulators closed Signature Bank, which had begun offering crypto services, and the federal government stated that all depositors’ funds would be safeguarded.[4]<\/a><\/sup> The Fed said it was also going to open up a facility to make funding available for other financial institutions in the form of one-year loans to try to limit contagion across the banking sector and to stave off other bank runs.[4]<\/a><\/sup><\/p>\n

The collapse of SVB is the second-largest bank failure in US history and the largest since Washington Mutual went under in 2008.[5]<\/a><\/sup> It has sent shock waves across the tech sector, and while smaller depositors are safe, many customers who had more money in the bank have been left in a difficult situation. The FDIC, Treasury Department and the Fed have taken measures to protect the economy and shore up confidence in the banking system, but the long-term effects of the collapse of SVB are still to be seen.<\/p>\n

0. <\/span>“Silicon Valley Bank failure could wipe out ‘a whole generation of startups'” NPR, 11 Mar. 2023, https:\/\/www.npr.org\/2023\/03\/11\/1162805718\/silicon-valley-bank-failure-startups<\/a><\/a><\/p>\n

1. <\/span>“Silicon Valley Bank’s failure, the government’s depositor rescue, and venture capitalists’ incredible tantrum.” Slate, 13 Mar. 2023, https:\/\/slate.com\/technology\/2023\/03\/silicon-valley-bank-rescue-venture-capital-calacanis-sacks-ackman-tantrum.html<\/a><\/a><\/p>\n

2. <\/span>“What is Silicon Valley Bank? The bank\u2019s collapse, explained.” Vox.com, 15 Mar. 2023, https:\/\/www.vox.com\/technology\/23634433\/silicon-valley-bank-collapse-silvergate-first-republic-fdic<\/a><\/a><\/p>\n

3. <\/span>“Silicon Valley Bank Bailout is Socialism for the Rich” Washington Free Beacon, 13 Mar. 2023, https:\/\/freebeacon.com\/columns\/silicon-valley-bank-bailout-is-socialism-for-the-rich<\/a><\/a><\/p>\n

4. <\/span>“Silicon Valley Bank bailout: Did the government just bail out SVB and Signature?” Vox.com, 13 Mar. 2023, https:\/\/www.vox.com\/money\/2023\/3\/13\/23638417\/svb-bank-bailout-signature-fed-fdic-treasury-janet-yellen<\/a><\/a><\/p>\n

5. <\/span>“Gavin Newsom hides ties to failed Silicon Valley Bank in statement praising Biden’s bailout” Fox News, 15 Mar. 2023, https:\/\/www.foxnews.com\/politics\/gavin-newsom-hides-client-failed-silicon-valley-bank-statement-praising-bailout<\/a><\/a><\/p>\n","protected":false},"author":3,"featured_media":2315,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[47],"tags":[],"_links":{"self":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/2316"}],"collection":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/comments?post=2316"}],"version-history":[{"count":0,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/2316\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media\/2315"}],"wp:attachment":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media?parent=2316"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/categories?post=2316"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/tags?post=2316"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}