Silicon Valley Bank Collapsed... Here's What Happened (#430)

TL;DR

Silicon Valley Bank (SVB) failed due to a bank run triggered by its disclosure of a $1.8B loss from selling long-term bonds bought when yields were ~1.5%, after the Fed raised rates to 3-4%. Depositors withdrew $42B in one day (25% of total deposits), far exceeding the prior record.

Key insights

• The bank run was accelerated by Silicon Valley's tight social network and digital banking: Peter Thiel and other VCs publicly urged portfolio companies to withdraw immediately, and $42B was wired out
• SVB's balance sheet problem had been building for months: startups (its primary depositors) were burning cash and reducing deposits, while SVB held long-duration bonds bought at low yields that became
• VCs simultaneously told portfolio companies to withdraw and publicly lobbied the government for a bailout using "single mother" and payroll narratives, but the hosts argue the Fed acted to prevent sys