Pandemonium broke loose in the banking world when Silicon Valley Bank collapsed earlier this month and sparked a chain reaction of similar failures, including Credit Suisse, First Republic Bank, Signature Bank, Silvergate Bank and others. Hundreds of banks remain at risk of the same fate.
USC experts in business and finance gave a postmortem account of the second-largest bank failure in U.S. history and the perfect storm of factors that led to Silicon Valley Bank’s demise.
With over $211 billion in assets by the end of 2022, SVB was the 16th-largest bank in the country before its collapse and a go-to funding source for venture capital-backed startups. A favorite among technology and health care companies, the bank catered to many of the high-risk, high-reward startups that had enjoyed a boom in profits during the pandemic.
Much of this influx of cash came to the bank in the form of uninsured deposits — amounts greater than the FDIC’s $250,000 limit to insure. In the event of a bank collapse, anything exceeding that amount is lost.
