Silicon Valley was already reeling before its favorite bank collapsed

What’s happening 

The collapse of Silicon Valley Bank, a financial institution that had played a key role in the tech industry’s explosive growth for 40 years, was in some ways the story of a single company making a series of disastrous decisions leading to its own downfall. But it’s also part of a larger picture about how a massive sector of the economy is facing a new set of challenges that create serious questions about its future. 

Until last week, Silicon Valley Bank — named after the California region that was the birthplace of the world’s biggest tech companies — was a key player in that industry’s financial infrastructure. The bank’s willingness to take chances on unproven early-stage companies allowed it to expand rapidly. At the start of the year, SVB had nearly $210 billion in assets and provided banking services to about half of U.S. startups. 

It took only two days for all that to fall apart. SVB’s key investors, spooked by fears about its stability, began withdrawing huge sums of money, setting off a run on the bank that quickly brought it to collapse. On Friday, the Federal Deposit Insurance Corporation took over SVB in order to protect depositors and prevent panic from spreading to other parts of the financial sector. After a weekend of uncertainty, President Biden gave an address on Monday to assert that the U.S. banking system was secure, all of SVB’s clients would be able to access their funds and taxpayers’ money would not be used to bail out the bank.

By Mike Bebernes.

Full story at Yahoo News.