Silicon Valley Bank Collapses: FDIC Seizure Causes Confusion and Controversy

On Friday, March 13, 2023, the Federal Deposit Insurance Corporation (FDIC) seized Silicon Valley Bank (SVB) due to a massive bank run that occurred on Thursday. SVB was the 16th most significant commercial bank in the United States and the biggest in terms of deposits in Silicon Valley, California.[0] The bank’s $209 billion in assets had been dropping for four straight quarters as tech valuations crashed from their pandemic-era highs, and on Thursday depositors tried to withdraw $42 billion, effectively rendering the financial institution insolvent.

SVB was known as “the bank of the global innovation economy,” and it catered to Silicon Valley, backing startups and other technology companies that traditional banks might shy away from.[1] It had $21 billion of assets that were sold at a $1.8 billion loss and it was attempting to raise an additional $2.25 billion of capital to bolster its balance sheet.[2]

The collapse of Silicon Valley Bank has caused concern and confusion within the tech start-up community, as many of its clients had more than $250,000 held at the bank, an amount that is above the FDIC’s normal insurance guarantee in case of bank failure.[3] The bank’s clients were in a bind because federal insurance only covers deposits up to $250,000, and almost 93 percent of SVB’s deposits were not insured.[4]

The bank had been catering to Silicon Valley startups and investors with deposits that generally exceeded the $250,000 FDIC deposit insurance limit, as well as investing in highly speculative technology projects.[1] It had employee resource groups (ERGs) to help various identity groups at the company with career development, and some large venture investors, including Peter Thiel’s Founders Fund, advised companies to pull their money from SVB.[5]

The US government announced that it would guarantee all deposits at SVB and Signature, and other banks are now under intense scrutiny, as their size and the nature of their assets might reveal heightened exposure or pose systemic risks to the financial system.[6]

Donald Trump Jr., Stephen Miller, Senator Josh Hawley, Rep. James Comer, and Florida Governor and presidential hopeful Ron DeSantis have blamed the bank’s diversity programs for the collapse.[7]

0. “Cybercriminals exploit SVB collapse to steal money and data” BleepingComputer, 14 Mar. 2023,

1. “Trump-era banking law paved way for Silicon Valley Bank’s collapse”, 13 Mar. 2023,

2. “Silicon Valley Bank's failure, the government's depositor rescue, and venture capitalists' incredible tantrum.” Slate, 13 Mar. 2023,

3. “What Does the Silicon Valley Bank Collapse Mean For The Economy?” FiveThirtyEight, 14 Mar. 2023,

4. “Silicon Valley Bank Bailout is Socialism for the Rich” Washington Free Beacon, 13 Mar. 2023,

5. “The End of Silicon Valley (Bank) – Stratechery by Ben Thompson” Stratechery by Ben Thompson, 13 Mar. 2023,

6. “See how Silicon Valley Bank and Signature Bank size up against the nation’s biggest banks” The Washington Post, 14 Mar. 2023,

7. “Opinion | The Boys Who Cried ‘Woke!’” The New York Times, 14 Mar. 2023,

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