On March 10, Silicon Valley Bank, one of the most prominent lenders in the start-up ecosystem, collapsed. Federal regulators stepped in to allay fears and limit risk in the broader financial system.
Here is a timeline of major events related to the bank’s collapse and its aftermath.
March 8
Silvergate Capital, a cryptocurrency-focused bank, announced it would cease operations and liquidate its assets after a bank run forced the California lender to sell a chunk of its debt securities.
Silicon Valley Bank concerned investors when it said it needed to shore up its balance sheet and raise $2 billion in capital. It was forced to sell a bond portfolio at a $1.8 billion loss.
In a letter to customers, Greg Becker, the chief executive of Silicon Valley Bank, said the bank enjoyed the “financial position to weather sustained market pressures,” but he noted that customer deposits had come in lower than forecast in February. Moody’s, a credit ratings firm, downgraded the bank’s bond rating and slashed its outlook to negative, from stable.
March 9
During a conference call, Mr. Becker urged venture capital firms to stay calm. Panic spread on social media among investors. Bill Ackman, the billionaire investor, suggested that Silicon Valley Bank could fail and need a bailout. In a note sent to clients, a Silicon Valley Bank executive wrote that the bank was “actually quite sound, and it’s disappointing to see so many smart investors tweet otherwise.”
Silicon Valley Bank’s announcement the day before prompted another wave of customer withdrawals, and its stock plummeted 60 percent.
March 10
Silicon Valley Bank failed after a run on deposits. It reportedly worked with financial advisers until the morning to find a buyer. By midday, regulators took over Silicon Valley Bank, the nation’s 16th-largest bank, and the Federal Deposit Insurance Corporation was named the receiver. The failure of the 40-year-old institution became the largest bank crash since the 2008 financial crisis, and it put nearly $175 billion in customer deposits under the regulator’s control.
Shock from Silicon Valley’s woes reverberated through parts of the banking sector, and investors started to dump bank stocks, including those of First Republic, Signature Bank and Western Alliance. Many of those institutions cater to niche clients. The nation’s largest banks appeared insulated from the fallout.
Treasury Secretary Janet L. Yellen reassured investors that the banking system was resilient.
Signature Bank, a 24-year-old, New York-based institution that lent largely to real estate companies and law firms, saw a torrent of deposits leaving its coffers.
March 12
To prevent the spread of banking contagion, regulators seized Signature Bank. To some extent, the bank, which had 40 branches, was a victim of the panic surrounding Silicon Valley Bank.
The Federal Reserve, the Treasury Department and the F.D.I.C. announced jointly that “depositors will have access to all of their money starting Monday, March 13” and that no losses from either banks’ failure “will be borne by the taxpayer.”
The F.D.I.C. invoked a “systemic risk exception,” which allows the government to pay back uninsured depositors to prevent dire consequences for the economy or financial instability. And the Fed announced that it would set up an emergency lending program, with approval from the Treasury, to provide additional funding to eligible banks and help ensure that they were able to “meet the needs of all their depositors.”
March 13
President Biden, in a speech, said the U.S. banking system was safe and insisted taxpayers would not pay for any bailouts. “This is an important point,” Mr. Biden emphasized. “No losses will be borne by the taxpayers.”
Regional bank stocks plunged, with First Republic taking the worst beating, dropping 60 percent.
HSBC said it would buy Silicon Valley Bank’s British subsidiary. A buyer was being sought for Silicon Valley Bank’s holding company, which includes asset management and a securities division, and excludes the commercial bank now under F.D.I.C. control.
March 14
Bank stocks recovered some of their losses.
The Justice Department and the Securities and Exchange Commission reportedly opened investigations into the collapse of Silicon Valley Bank.
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