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Silicon Valley Bank Collapse
Steven, Bradbury School, Hong Kong
On Mar 10, 2023 The Silicon Valley bank sold treasuries and lost 2.25 Billion dollars, which triggered a bank run and the bank collapsed in less than 48 hours. On the 12th of march the stocks of the company dived down 60%.
Silicon Valley Bank is a U.S. bank in California known for its bond with technology start-up companies. Once a star in the US banking industry, ranking as the 16th largest bank, SVB suffered a bank run overnight and lost its glory.
A bank run is when the customers think that this bank is going to collapse so most of them will take large sums of money out of the bank. But some banks don’t have enough savings to give to the customers . That’s how it starts.
Most start-up technology companies rely on the Silicon Valley bank to lend them money to build their business like, Rocketlab, Roblox, Roku and much more . Later the government said the insured deposits are up to 250,000 dollars, which means that they at least have 250,000 that they can get back from the bank. But some people will still lose money, Because some people’s savings in this bank is more than 250,000 dollars.
The Government is guaranteeing 250,000 dollars fund back to the customers. At the same time the Federal Reserve says that they will make a program in the future for a term funding program. The funding program is to stop this from happening.
After the collapse, another bank called Signature bank also collapsed to a series of different problems. After that another bank called First Republic bank had the same risk as SVB, but later big banks sended 30 billion dollars as a rescue package.
NYTimes journalist Kevin Rosse says : “That year, the stock market boomed, interest rates near zero and money flooded into the tech sector. Many companies park their money into SVB.” Then he said:“It made the bank invest in long term bonds. If there was a bank run the bank would have no money to take out.”
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