Silicon Valley Bank's rapid implosion ended up shaking the foundations of the entire global financial system. Here's why almost everyone failed to predict its collapse.
But then, on the morning of Friday, March 10, after clients withdrew $42 billion in the span of a single day, state and federal regulators swooped in to try to salvage what remained of SVB. In the head-spinning hours that followed Silicon Valley Bank became a global household name, though hardly in a manner its founders would have hoped for: It was officially the second-largest bank failure in US history, after Washington Mutual in 2008.
When a few members of its tight-knit, social-media-engaged community of clients began to worry about the bank’s viability, the panic went viral. Red flag No. 3: The clientele Silicon Valley Bank was known for working with young tech start-ups that other banks may have shunned. When those start-ups flourished, SVB grew alongside them. The bank also managed the personal wealth of those start-ups’ founders, who were often light on cash as their fortunes were tied to equity in their companies.
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