The Silicon Valley Bank Panic Timeline
The loss of Silicon Valley Bank led to the demise of a second bank and forced regulators to take steps to control the damage in the United States financial system.
On March 10, one of the most renowned lenders in the startup community, Silicon Valley Bank, failed. Federal authorities intervened to calm worries and reduce risk in the banking system as a whole.
Here is a timeline of major events surrounding the collapse of the bank and its aftermath.
- The cryptocurrency-focused bank Silvergate Capital stated on March 8 that it would suspend operations and liquidate its assets after a bank run prompted the California lender to sell a portion of its debt instruments.
- Silicon Valley Bank's announcement that it needed to strengthen its balance sheet and raise $2 billion in capital alarmed investors. It was compelled to sell its bond holdings at a loss of $1.8 billion.
- During a conference call, Mr. Becker advised venture capital firms to maintain their composure. Investors' panic spread on social media. The billionaire investor Bill Ackman indicated that Silicon Valley Bank would fail and require a bailout. A Silicon Valley Bank official stated in a note to clients that the bank was "actually quite sound, and it's disappointing to see so many savvy investors tweeting otherwise."
- The previous day's announcement by Silicon Valley Bank provoked a new wave of customer withdrawals, and its shares fell 60 percent.
MARCH 10 (D-DAY)
- The Silicon Valley Bank failed on March 10 due to a run on deposits. Until the morning, it reportedly sought with financial advisors to locate a buyer. The Federal Deposit Insurance Corporation was designated as the receiver for Silicon Valley Bank, the nation's sixteenth-largest bank, at lunchtime. The collapse of the 40-year-old organization was the greatest bank failure since the 2008 financial crisis, and it placed over $175 billion in customer deposits under the hands of the regulator.
- Janet L. Yellen, secretary of the Treasury, reassured investors that the banking system was robust.
- Signature Bank, a 24-year-old, New York-based business that loans mostly to real estate firms and law firms, witnessed a deluge of withdrawals.
- Regulators seized Signature Bank to prevent the spread of a banking pandemic. The bank, which had 40 branches, was affected to some degree by the panic surrounding Silicon Valley Bank.
- The Federal Reserve, the Treasury Department, and the F.D.I.C. jointly said that "depositors will have full access to their funds beginning on Monday, March 13" and that "no taxpayer losses will result from the failure of either bank."
- The F.D.I.C. invoked a "systemic risk exception" that permits the government to repay uninsured depositors in order to prevent grave economic effects or financial instability. And the Fed said that, with Treasury permission, it would establish an emergency lending program to give additional liquidity to qualifying banks and ensure that they could "meet the needs of all depositors."
- President Biden stated in a speech on March 13 that the U.S. banking sector was safe and that taxpayers would not pay for bailouts. Mr. Biden emphasized, "This is a significant point." There will be no losses borne by taxpayers.
- First Republic's stock fell the most, by 60 percent, among the regional bank stocks.
- The British division of Silicon Valley Bank will be acquired by HSBC. The holding company of Silicon Valley Bank, which includes asset management and a securities business but excludes the commercial bank currently under F.D.I.C. administration, sought a buyer.
- Bank stock prices recovered a portion of their losses.
- According to reports, the Justice Department and the Securities and Exchange Commission have launched investigations into the failure of Silicon Valley Bank.
- Credit Suisse shares fell 24 percent on March 15, a record low. The Swiss National Bank, the country's central bank, stated that it will offer Credit Suisse with financial support if necessary.
- At the closing of trading on Wall Street, the S&P was down 0.6%, undoing a portion of the previous day's rise, as investors' concerns about the health of the banking industry reappeared.
- First Republic Bank received $30 billion in deposits from a dozen of the largest institutions in the United States, including JPMorgan Chase, Wells Fargo, and Morgan Stanley, on March 16. The shares of the troubled bank closed up 10 percent.
- Credit Suisse said that it will borrow $54 billion from the Swiss central bank.
- As of Wednesday, the Federal Reserve reported that banks have borrowed $11.9 billion from the emergency loan program it introduced on Sunday to stabilize the banking system.
- Janet L. Yellen appeared before the Senate Finance Committee and attempted to reassure the public that American banks remain "sound."