Silicon Valley Bank Crash
Uh Oh! Where’d our money go?
Silicon Valley Bank is a massive financial institution holding over 200 billion dollars. As of March 10, 2023, the bank has been closed by the California Department of Financial Protection and Innovation and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. The reason it went under is because of a bank run. This is when a bunch of people or investors pull out all of their money at once.
It’s okay to pull out your money, but if too many people do it at once, the bank doesn’t have enough cash to pay back other people when they need to get their money out. So, the bank has to sell off assets immediately, usually at a loss.
When other people learn that the banks are being forced to sell off assets at a loss, it creates a cycle where more people panic and want to pull out money. This is what happened and caused the bank to crash.
So what happens now? Silicon Valley Bank is FDIC insured which means that the government will step in and pay everybody back that had $250,000 or less. If you had more than $250,000 with SVB, you don’t really know when you’re gonna get that back.
