Silicon Valley Bank Fails

Setting the scene

Silicon Valley Bank specialized in serving venture-capital firms, startups, and technology companies. During the low-interest-rate boom of 2020 and 2021, deposits surged as startups raised large funding rounds. SVB invested much of that money in longer-duration securities that lost market value when the Federal Reserve rapidly raised interest rates in 2022 and 2023.

What happened

In March 2023, SVB announced losses and a plan to raise capital, alarming depositors whose balances often exceeded FDIC insurance limits. Venture investors and startup executives urged companies to pull funds, and digital banking made the run extremely fast. Regulators closed the bank on March 10, 2023. Federal authorities later guaranteed all deposits, including uninsured ones, to reduce contagion across the banking system.

Why it still matters

SVB's collapse was one of the largest bank failures in U.S. history and triggered broader stress among regional banks, including Signature Bank and First Republic. It renewed attention to interest-rate risk, uninsured deposits, bank supervision, and how online coordination can accelerate a run. Memorable detail: unlike old-fashioned bank runs with lines outside branches, much of SVB's run happened through group chats, emails, and wire transfers.

Background

Silicon Valley Bank failed in March 2023 after rising interest rates, unrealized bond losses, and a rapid depositor run overwhelmed the bank.