# Silicon Valley Bank The Santa Clara bank that served as the depository for the startup and venture-capital economy — roughly half of all venture-backed U.S. companies banked there — until it failed on **March 10, 2023**, in the second-largest bank failure in American history at the time (about $209 billion in assets) and the fastest: $42 billion of withdrawal requests on March 9 alone, and $100 billion more queued for the next morning. It is the vault's reference case for a [[Bank Run]] in the age of the group chat, for the [[Cascading Failure]] that followed, and for how a regulatory rollback becomes a bailout. ## How it failed Deposits tripled during the pandemic boom, and SVB put the money into long-dated Treasuries and agency mortgage bonds at the bottom of the [[ZIRP]] era — safe against default, wide open to interest-rate risk. When the [[Federal Reserve]] raised rates through 2022, the portfolio lost roughly $15 billion of market value, about equal to the bank's capital, a loss that was legal to leave unrecognized in the "held-to-maturity" book and that management, and the Fed's supervisors, saw coming. On March 8, 2023 the bank announced it had sold $21 billion of securities at a $1.8 billion loss and would raise capital. Its depositors were a few thousand venture-backed firms holding balances far above the $250,000 insurance limit — about 94% of deposits were uninsured — advised by a few hundred VCs who talked to each other. [[Peter Thiel]]'s [[Founders Fund]] told its companies to pull their money on March 9; others did the same; the run took a day. ## The rescue On Sunday March 12 the Treasury, Fed and [[FDIC]] invoked the "systemic risk exception" to guarantee all deposits at SVB and at [[Signature Bank]], which had failed that day, and the Fed opened a facility lending against bonds at par. [[First Republic Bank]] went seven weeks later. The uninsured depositors — including the venture firms whose advice had triggered the run — were made whole; shareholders and bondholders were not; the FDIC's insurance fund took about a $20 billion hit, recovered by a special assessment on large banks. First Citizens bought the remains on March 27. The [[Savings and Loan Crisis]] page has the older precedent; [[SIFI]] and [[Capital Requirements]] the doctrine. ## What it was a case of The Fed's own review (April 2023) blamed management, its supervisors' slowness, and the 2018 law that had raised the threshold for enhanced supervision from $50 billion to $250 billion in assets — a rollback of the [[Dodd-Frank Act]] that SVB's chief executive had personally lobbied for. The vault reads three lessons. A [[Bank Run]] is now a coordination event among a few hundred people with the same information and the same Signal groups, which the 1930s bank-holiday rules did not anticipate. The "no bailout" line drawn in 2008 did not survive its first contact with a depositor class that was politically connected. And the [[Financial System Timeline]] shows the pattern: deregulate at the top of the cycle, backstop at the bottom, and count neither as a subsidy. [[The Banking System]] and [[Tech History Hub]] carry the surrounding structure; [[Palmer Luckey News Log]] records the defense-tech founders who used the episode to argue for a bank of their own. ## See Also - [[Bank Run]] · [[Cascading Failure]] · [[SIFI]] · [[Capital Requirements]] · [[ZIRP]] · [[Federal Reserve]] · [[Dodd-Frank Act]] - [[FDIC]] · [[Signature Bank]] · [[First Republic Bank]] · [[Savings and Loan Crisis]] · [[The Banking System]] · [[Financial System Timeline]] - [[Peter Thiel]] · [[Founders Fund]] · [[Palmer Luckey News Log]] · [[Tech History Hub]]