What Happened at Silicon Valley Bank

WASHINGTON - March 19, 2023 - PRLog -- According to news reports, "Silicon Valley Bank, which catered to the tech industry for three decades, collapsed on March 10, 2023, after the Santa Clara, California-based lender suffered from an old-fashioned bank run. State regulators seized the bank and made the Federal Deposit Insurance Corporation its receiver. SVB, as it's known, was the biggest U.S. lender to fail since the 2008 global financial crisis – and the second-biggest ever."

Given the lack of understanding surrounding the issue, Creative Investment Research has released an explainer video describing what happened to the bank and, by extension, the financial system. See: https://youtu.be/gPu1cWQjYqE



The video describes the bank's initial condition, the impact of Fed rate increases and the role of venture capital firms in facilitating the crisis.

On March 12th, the White House issued the following statement:

"Over the weekend, and at my direction, the Treasury Secretary and my National Economic Council Director worked diligently with the banking regulators to address problems at Silicon Valley Bank and Signature Bank. I am pleased that they reached a prompt solution that protects American workers and small businesses, and keeps our financial system safe. The solution also ensures that taxpayer dollars are not put at risk.

The American people and American businesses can have confidence that their bank deposits will be there when they need them.

I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again."

On the same day, the Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg stated:

"After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.

We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer."