On March 10, the Silicon Valley Bank collapsed, the second largest bank failure in American History. The Silicon Valley Bank, or SVB, was the 16th largest bank in the U.S. and was known for funding start-up technology companies. This resulted in the loss of $1.8 billion, emergency political meetings, and other bank shutdowns. 

   The company announced it would be raising money to “strengthen [its] financial position” after rising interest rates on unsecured deposits led to a liquidity crisis. There was an increase in companies pulling out their deposits, leading to a mass panic of investors selling off their shares of SVB. This combined with only $250,000 of the large deposits of the bank’s start-up clientele being protected led to its collapse.

   The collapse was met with intervention from the federal government. The Federal Deposit Insurance Corporation, or FDIC, stepped in and seized SVB’s holdings. North Carolina Congressman, Jeff Jackson, reported on Instagram that on March 13, the Department of the Treasury ordered an emergency meeting of congress to “announce extraordinary steps that will now be taken to secure our financial system.”

   President Biden urged Americans to remain calm and said they could be confident their deposits were safe. He also announced that the government plans to make all deposits whole using funds from an insurance deposit all banks currently pay into. Additionally, he made it especially clear these funds will not be from taxpayers’ money. 

   The fear resulting from this collapse has led to other bank failures and fears for our economic system. Signature bank in New York closed on March 12. Banks like JPMorgan Chase and Co. and Bank of America Corp. were hit by two to four percent. Credit Suisse was bought by its rival, the United Bank of Switzerland, to prevent further turmoil in the market. Immigrant founders were left especially concerned as SVB was known for diversity. Politicians are urging people not to withdraw with fears of a bank run occurring at the current rate. 

   CEOs in Silicon Valley are rushing to make payroll as they struggle to process money for their employees. Prominent companies like Snap Inc (parent company of Snapchat), Roku, and Buzzfeed are losing hundreds of millions of dollars. Actress Sharon Stone said in her speech at the Women’s Cancer Research Fund that she lost nearly half of her entire fortune in the collapse. Businesses have started recovering but at a slow rate.

   Though inflation and rising interest rates harm banks, the effects of public fear spreading shook this large bank which relied heavily on trust in its security.