Silicon Valley Bank has FAILED, becoming the largest US bank failure since 2008
Silicon Valley Bank had been chugging along since 1983, and was highly respected.
On March 8, it was considered a stable bank, with no signs of collapse imminent. Then they surprised investors that they needed to raise $2.25 billion in order to balance their books.
This caused a panic by area venture capitalists, who ran to the bank and withdrew huge money. Within a little more than 24 hours, $42 billion was withdrawn from the bank, completely devastating it.
Today, the FDIC shut them down.
It is the biggest bank failure in 15 years. Back in 2008, tons of banks were failing due to the financial crisis, and the FDIC had to pay out to a lot of customers who had money in those banks. (This includes me -- I received about $500k in FDIC payments in 2008, and thankfully didn't lose any money.)
Since the '08 bank failures, the industry restructured, and complete collapses became rare. Instead, troubled banks would end up being bought by bigger banks, thus saving customer funds beyond FDIC insurance limits, and also preventing the FDIC from needing to get involved. There have been some bank collapses in the past 15 years where they were not bailed out and bought by larger institutions, but none were major.
This is the first major one in that time. Unfortunately, it is seen as being mostly artificially induced by a panic bank run. Had this run not occurred, it is highly like Silicon Valley Bank would have been fine in the medium term.
This is also wreaking havoc upon startups in the area, as some companies will not have the cash to pay employees today. Additionally, massively popular kids multiplayer game Roblox is taking a beating, as 5% of their cash was in Silicon Valley Bank, and there is a good chance they will never see it again.
https://www.cnbc.com/2023/03/10/sili...-happened.html
