The US regulator had to step in. It took over the bank. Now there are two questions on everyone's mind. Number one will startups collapse? This is a little tricky to answer. We don't know yet how bad things could be. How did the Roth spread to other banks? Probably not. But just like how the collapse of Silvergate played a part in bringing down SVB, SVB's collapse could scare everyone. If people lose trust in their banks and believe that all banks have poor practices, then bad stuff will happen. They could rush to pull their money out of the system. Until then, fingers crossed.
On 7th March, Silicon Valley Bank tweeted, “Proud to be on @Forbes’ annual ranking of America’s Best Banks…”
By 10th March, SVB’s stock price had tanked by 60% and the bank was taken over by an arm of the US government.
What on earth happened?
In today’s episode for 13th March 2023, we try to break down what’s turning out to be the biggest financial disaster since 2008. Remember, this is a simplified explainer so we’ll have to sidestep some of the nuances of the US banking system.
With that, let’s dive in.