Silicon Valley Bank, founded in 1983, served venture capitalists, startups and California wineries. During the pandemic its deposits doubled from $62 billion in March 2020 to $124 billion a year later, and it put over $91 billion into long-term bonds classified as held to maturity, without substantial hedges. When the Federal Reserve raised rates in 2022, those bonds lost tens of billions in market value as startups drew down deposits. For eight months of 2022 the bank had no chief risk officer, and Fed supervisors issued matters requiring attention on its interest rate and liquidity risk.

On March 8, 2023, SVB disclosed a $1.8 billion loss on bond sales and a plan to raise $2.25 billion. Moody’s downgraded it, venture firms told portfolio companies to pull funds, and on March 9 customers requested $42 billion in wire transfers, leaving the bank nearly $1 billion negative. Regulators seized it on March 10, and by Sunday the Treasury, Fed and FDIC invoked the systemic risk exception to cover all deposits at SVB and Signature Bank. A Fed review led by Michael Barr called the failure a textbook case of bank mismanagement, and First Citizens Bank bought the commercial banking business.

• About 89 percent of SVB’s deposits were uninsured, above the $250,000 FDIC limit.
• Roku had nearly half a billion dollars at the bank, and Etsy seller payouts froze.
• The guarantee was paid from the Deposit Insurance Fund, financed by fees on banks, while shareholders were wiped out and executives fired.
• CEO Greg Becker had lobbied for the 2018 law that eased stress testing for mid-sized banks.
• Fact checkers found no evidence that ESG or diversity programs caused the collapse.