Short version: Silicon Valley Bank (SVB) encountered a classic bank run.
Longer version: Following the spectacular collapse of the startup-focused lender, Silicon Valley Bank on Friday, President Biden made some bold claims.
In a press conference Monday morning March 13, 2023, Biden said “Americans can have confidence that the banking system is safe”.
But can we really? And how did we get here?
Wednesday, March 8th: SVB admits they sold a bunch of securities (stocks, bonds, etc.) at a loss. To make up for the loss, they’d have to sell $2.25 BILLION in new bank shares.
Thursday, March 9th: Venture capital firms PANIC, advising companies to withdraw their money from the bank.
Later that morning, the bank’s stock plummeted. By the afternoon it was dragging other bank shares down with it.
“Investors began to fear a repeat of the 2007-2008 financial crisis.”
— ABC Financial News
Friday, March 10th: Trading shares halts, and leadership abandons the search for new buyers. California regulators intervene, shut the bank down, then the FDIC takes over.
Signature Bank closes after shares dropped 16%.
Monday, March 13th, 09:25 AM EST:
- Biden tells Americans, “Americans can have confidence that the banking system is safe”…
- But investors in the bank will not be protected: “They knowingly took a risk, and when the risk didn’t pay off, investors lose their money”
But there’s more: DOZENS of companies are exposed to the collapse:
- ROBOLOX $150M
- ROKU $487M
- ACUITYADS $55M
- BLOCKFI $227M
- CIRCLE $3.3M
- GINKGO BIO $74M
- IRhythm $55m
- ROCKETLAB $38M
- LENDINGCLUB $21M
How will the collapse impact the broader financial system? Details to come…
EDITOR’S NOTE: This story is still in development.
2 comments
Biden does NOT give me any confidence what-so-ever! He has lied so much already that he should be “The Little Boy Who Cried Wolf” star!
So, where did the comment go?