The crisis erupted when struggling tech companies began withdrawing their money from Silicon Valley banks for financing needs, forcing SVB to sell bonds that had fallen in value after the central bank’s sharp rate hikes. The bank’s capital losses resulted in more than $250,000 in deposits that were not FDIC insured and led to additional customers withdrawing their money.
Similar bank runs led to the demise of New York’s Signature Bank and threatened First Republic Bank, which recently received $30 billion in deposits from JPMorgan and other big banks. Meanwhile, UBS bought a teetering Credit Suisse.
The central bank and other regulators announced that the SVB would provide funding to ensure depositors have access to their money in signature and other banks that pose a risk to the financial system. They also released a lending facility so other regional banks could borrow money to recoup uninsured depositors’ money.
