TECH BANKS FALL, OTHERS STUMBLE

Bank, from page 1

Government, at both the state and federal level, acted swiftly, and, after a day and a half of lobbying, anxiety, uncertainty and near panic, the U.S.Treasury took the unprecedented step Sunday night of guaranteeing that billions in deposits in a shuttered Silicon Valley Bank would be honored by the U.S. government, funded largely by mega-banks.

SVB shareholders and employees would be out of luck.

The bank was for perhaps three decades the preferred lender of anything tech, from chipmakers to online sellers, and startups of all shapes and sizes from California to New York to London. It was closed March 10 by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation (FDIC) was appointed receiver. The FDIC took control of the Santa Clara-based tech-focused lender following a run on deposits by investors worried about rising interest rates.

Silicon Valley this month began selling securities at an increasing pace to cover those lost deposits. When other investors panicked as they saw their bank selling assets at a loss and losing deposits, they also began to withdraw their money. That’s a formula for a bank collapse—in this case the biggest U.S. bank to fail since Washington Mutual in 2008.

The FDIC took over the bank, but as of March 10, it was unclear what would happen next, especially when it began to look like its efforts to auction off Silicon Valley Bank’s assets was finding no early takers.

On March 11, hundreds—eventually 599—of venture capitalists lobbied federal authorities to bail out the bank, which they said was indispensable to keeping the nation’s world-leading technology engine running, and also to the maintenance of their role as the fuel for that engine.