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Silicon Valley Bank’s collapse has sent shockwaves through the financial industry, particularly in the technology startup sector. The bank’s demise was caused by a series of events, including the Federal Reserve’s decision to raise interest rates, which made investors more risk-averse and led to a shut-down of the market for initial public offerings.
To stem the spread of contagion and a nationwide bank run, federal regulators announced measures to limit the impact of the collapse of Silicon Valley Bank on the US banking system, the most significant such move since the 2008 crisis. The collapse of Silicon Valley Bank and Signature Bank has further prompted the Federal Reserve to set up an emergency lending program to help eligible banks meet the needs of depositors. Mr. Biden has confirmed that taxpayers will not bear losses related to the failed banks, and managers of banks taken over by regulators will face consequences.
The global impact of these events is reflected in choppy trading in markets around the world, with many regional banks hit hard, alongside Silicon Valley Bank’s notable roster of clients which includes some well-known companies, including Roku, Roblox, and Vox Media.
