Silicon Valley Bank Collapses: FDIC Takes Control, Customers to Receive Insured Deposits

Silicon Valley Bank, a lender that had been a fixture in the venture capital space for decades, collapsed on Friday.[0] The FDIC was named receiver by the California Department of Financial Protection and Innovation after SVB was closed.[1] On Wednesday, SVB's announcement to raise billions in order to compensate for major losses sparked fear among investors and tech entrepreneurs who had been supported by them.[2] On Thursday, the company's stock plummeted by 60%, followed by a further 20% dip in post-market trading. Consequently, trading was halted when the market opened on Friday.[2] After several hours had passed and news circulated that SVB was having difficulty finding buyers in a sale, the government stepped in and assumed control.[2]

On Monday, March 13, the FDIC announced that customers of SVB would be able to access their insured deposits. It is still uncertain how customers will be able to get back their uninsured deposits.[2] The FDIC also created the Deposit Insurance National Bank of Santa Clara and announced that all insured depositors will have access to their insured funds no later than Monday.

Friday saw the Federal Deposit Insurance Corporation take over SVB, and it could be that the Federal Reserve will have to take further measures as it attempts to rectify its errors in applying loose monetary policies.[3] Investors appear to be fearful of the regional banking sector, as evidenced by the significant drops in stocks such as First Republic Bank (-14.8%) and PacWest Bancorp (-37.9%).[4]

Silicon Valley Bank, established in 1983 in Santa Clara, California, was created specifically to serve the growing tech industry and the people who funded it. It has become the go-to bank for those in the field.[5] By 2021, the bank had stated that it provided banking services to nearly half of all US venture-backed startups.[5] A lot of the venture capital firms that fund startups have this bank as a partner.[5] Silvergate Bank (SVB) positions itself as the “financial partner of the innovation economy.”[5]

The bank was heavily dependent upon a single risky sector of the economy for both its depositors and its customers, and was very concentrated with high exposure to one industry.[5] This opened it up to risk, and when things got bad for its non-diversified group of clients, it very quickly got bad for the bank.[5]

On Monday, customers of the FDIC will be able to access their insured deposits in full up to $250,000.[6] But $250,000 is “chump change” compared to what most tech companies stashed in SVB, the founder says.[7]

0. “Companies scramble to meet payroll, pay bills after SVB's swift failure” CNBC, 10 Mar. 2023,

1. “Tech CEO with millions in Silicon Valley Bank: ‘Innovation in the startup world is bleeding today'” Fox Business, 10 Mar. 2023,

2. “Silicon Valley Bank had no official chief risk officer for 8 months while the VC market was spiraling” Fortune, 10 Mar. 2023,

3. “‘This hit like a ton of bricks': Troubles at Silicon Valley Bank ripple across Boston tech scene” The Boston Globe, 11 Mar. 2023,

4. “Opinion | And Now for a Little Bank Panic” The Wall Street Journal, 10 Mar. 2023,

5. “What is Silicon Valley Bank? The bank’s collapse, explained.”, 10 Mar. 2023,

6. “What to know about the spectacular collapse of Silicon Valley Bank” NPR, 10 Mar. 2023,

7. “Most of Silicon Valley Bank's Deposits Were Uninsured” TIME, 10 Mar. 2023,

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