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Silicon Valley Bank Collapses. Second Largest Financial Institution in U.S. History

CNN | and | March 10, 2023

Silicon Valley Bank SVB - Silicon Valley Bank Collapses.  Second Largest Financial Institution in U.S. History

Silicon Valley Bank headquarters in Santa Clara, California

Silicon Valley Bank collapsed Friday morning after a stunning 48 hours in which a bank run and a capital crisis led to the second-largest failure of a financial institution in US history.

  • California regulators closed down the tech lender and put it under the control of the US Federal Deposit Insurance Corporation. The FDIC is acting as a receiver, which typically means it will liquidate the bank’s assets to pay back its customers, including depositors and creditors.
    • The FDIC, an independent government agency that insures bank deposits and oversees financial institutions, said all insured depositors will have full access to their insured deposits by no later than Monday morning. It said it would pay uninsured depositors an “advance dividend within the next week.”
    • SVB was among the top 20 American commercial banks, with $209 billion in total assets at the end of last year, according to the FDIC.  It’s the largest lender to fail since Washington Mutual collapsed in 2008.

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  • What happened? Silicon Valley Bank’s decline stems partly from the Federal Reserve’s aggressive interest rate hikes over the past year.  Higher rates hit tech especially hard, undercutting the value of tech stocks and making it tough to raise funds, Moody’s chief economist Mark Zandi said. That prompted many tech firms to draw down the deposits they held at SVB to fund their operations.
  • Crypto-focused lender Silvergate said Wednesday it is winding down operations and will liquidate the bank after being financially pummeled by turmoil in digital assets. Signature Bank, another crypto-friendly lender, was hit hard by the bank selloff, with shares sinking 30% before being halted for volatility Friday.

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