Breaking Down Breaking News: The collapse of the Silicon Valley Bank


Credit: Alyssa Ao

Staff Reporter Selena Liu discusses the recent collapse of the Silicon Valley Bank and its effects on local banks.

Selena Liu

What you need to know:

On Friday, March 10, Silicon Valley Bank (SVB), the United States’ 16th largest bank, collapsed. A variety of factors contributed to its collapse, including the decreasing value of investments, the Federal Reserve’s recent raising of interest rates, too many of its investments being involved in one industry and a large number of customers withdrawing their money.

The SVB collapse is the largest bank collapse in the United States since the economic recession in 2008.

Why it matters:

In 2022, over 1,074 firms held capital in SVB, so the sudden collapse of the bank caused large disruptions to many financial institutions across the world. The enormous banking company was used for “essential financial services” by many chief international technology companies and was more likely to engage in risky investments than other banks. Furthermore, SVB was willing to work with non-US citizens and assist start-up businesses. Now, many companies are in a panic as they search for another company that offers similar services.

SVB was known for being the “only bank” that would “provide credit and loans to historically underbanked founders.” Now that the bank has collapsed, historically oppressed groups may not have the same opportunities provided by SVB to start their own businesses. The collapse of SVB might force these groups to turn to other banks, which may offer them less opportunities or more discriminatory contracts.

On Monday, March 13, President Joe Biden declared that all funds lost in the bank collapse would be returned, with no taxpayer money being used in the process. According to the Federal Deposit Insurance Corporation (FDIC), bank deposits under $250,000 are insured by the federal government.

However, this statement came after many citizens and businesses hurried to withdraw their money after hearing of the bank’s instability. For many who attempted to withdraw their money, transfers were unsuccessful, and their money disappeared.

What are other sources to look at?

“SVB collapse: Bay Area customers weary, yet relieved as they begin to receive money back” –
“Federal Officials Testify on Silicon Valley Bank Collapse” –
“Banks: Is this a banking crisis – how worried should I be?” –