Silicon Valley Bank Crash - The DownloadAstro Summary

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March 13, 2023

Recently, Silicon Valley Bank (SVB), a well-known financial institution that caters to innovative companies and high-net-worth individuals in the technology sector, has been making headlines for all the wrong reasons. The bank was placed into receivership by the Federal Deposit Insurance Corporation (FDIC) due to concerns about the bank’s financial health and ability to meet its obligations. This has left many SVB customers, including depositors and investors, wondering what will happen to their funds and investments. In this post, we’ll take a closer look at the situation and provide answers to some of the most pressing questions surrounding the SVB receivership.

What is Silicon Valley Bank, and what happened to it?

Silicon Valley Bank is a US-based bank that specializes in providing financial services to technology and life science companies, as well as venture capitalists and private equity firms. In recent months, the bank has faced financial troubles due to its exposure to risky loans and a challenging interest rate environment. In March 2023, the bank announced that it was being effectively taken over by the US government, and its UK arm was sold to HSBC

Should I be worried if I have money invested in Silicon Valley Bank?

If you have money invested in Silicon Valley Bank, it’s understandable to be concerned about the bank’s financial troubles. However, it’s important to remember that the US government has stepped in to ensure the bank’s stability, and the UK arm has been sold to a reputable financial institution. Additionally, the bank’s troubles appear to be largely confined to its exposure to risky loans, which should not impact deposits or other forms of investment.

What impact has the Silicon Valley Bank situation had on the broader banking industry?

The Silicon Valley Bank situation has led to a wider sell-off of bank stocks across the US and Europe, as investors become concerned about the impact of US central bank moves against inflation through interest rate hikes. The era of cheap credit has come to an end, and many banks are grappling with the consequences of having made large investments in bonds bought at rock-bottom prices during that era. This has led to some smaller, more vulnerable lenders being hit particularly hard, while larger banks with stronger regulation and stress testing have fared somewhat better.

What does the future hold for Silicon Valley Bank?

It’s unclear what the future holds for Silicon Valley Bank at this time, as the bank’s troubles are still unfolding. However, the US government’s intervention to stabilize the bank, along with the sale of the UK arm to HSBC, should provide some measure of reassurance to investors. It’s likely that the bank will undergo some significant changes in the coming months as it adjusts to its new financial reality, but it remains to be seen what those changes will look like.

What lessons can we learn from the Silicon Valley Bank situation?

The Silicon Valley Bank situation provides a number of important lessons for investors and financial institutions alike. First, it underscores the importance of careful risk management when investing in potentially volatile assets. Second, it highlights the risks associated with relying on a single sector or industry for investment opportunities. Finally, it points to the need for stronger regulation and stress testing of financial institutions to ensure their stability in the face of market shocks.

It is important to note that the recent troubles facing SVB have centered on its UK arm, which was sold to HSBC for a token sum of £1. While the sale has been described as protecting customers and taxpayers, it is unclear how it will impact existing borrowers or depositors.

It is also important to note that Silicon Valley Bank is an FDIC-insured institution, which means that customer deposits up to $250,000 are protected by the federal government in the event of a bank failure. However, it is not clear at this time whether customers with deposits above this amount will be fully protected in the event of a bank failure.

If you are a borrower or depositor with Silicon Valley Bank, we recommend that you monitor the situation closely and seek advice from a financial advisor if you have concerns about the safety of your funds.

Is the SVB crisis the next Lehman Brothers crash?

It is not accurate to say that the SVB crisis is the next Lehman Brothers crash. While there are certainly similarities between the two situations, there are also some important differences.

Lehman Brothers was a large investment bank that filed for bankruptcy in September 2008, triggering a global financial crisis. Its collapse was due in part to its exposure to subprime mortgages and a lack of liquidity.

In contrast, SVB Financial Group (SVB) is a smaller bank that specializes in providing financial services to technology and innovation companies. In March 2020, SVB suffered a significant drop in stock price due to the COVID-19 pandemic, but it has since recovered. More recently, there have been concerns about the bank’s exposure to the collapse of a hedge fund called Archegos Capital Management.

While the Archegos situation has caused some disruptions in the financial markets and could potentially lead to losses for SVB and other banks involved, it is not on the same scale as the Lehman Brothers collapse. The global financial system is also in a stronger position now than it was in 2008, with stronger regulations and safeguards in place to prevent a widespread financial crisis.

What has the FED said about my funds? 

The FED released a statement early this week, saying: 

“The additional funding will be made available through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets will be valued at par. The BTFP will be an additional source of liquidity against high-quality securities, eliminating an institution’s need to quickly sell those securities in times of stress.”

FAQ for The Bank’s Clients

FAQ 1 – Are my deposits insured?

As mentioned before, FDIC insures deposit of up to $250.000. It’s important to note here that the insurance covers this sum for each ownership category. Meaning that, if the same legal entity owns multiple accounts, a total of $250.000 is ensured across all accounts. Depositors are permitted to access insured funds and direct their deposits.

FAQ 2 – What about the uninsured deposits?

The FDIC issued the following press release – “Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.”

Though this payment timing is still uncertain, the Federal Deposit Insurance Act also sets forth a priority scheme for the payment of claims.

FAQ 3 – How do you establish a claim to the uninsured deposits?

If you’re an SVB customer with more than $250.000 on your account, you can contact the FDIC directly, using a toll-free number – 1-866-799-0959

Using this number you can schedule a telephone appointment with one of the Claim Agents who’ll be able to help you. And on the 13th of March, the FDIC released a claims portal, where customers are able to check their insurance status.

FAQ 4 – Do you need to continue making payments if you have a loan with SVB?

The FDIC also released a statement saying “you should continue making payments as usual” since the terms of your loan haven’t changed.

FAQ 5 – Having a line of credit at SVB

It’s important to know that all lines of credit have been effectively frozen as of March 10th. This means you will have to establish a new line of credit, with a new bank.


The recent crisis involving SVB Financial Group has raised many questions about the stability of the financial system and the potential risks faced by banks and investors. While there are certainly concerns about the bank’s exposure to the collapse of a hedge fund and the impact this could have on the broader market, it is important to keep in mind that this situation is not on the same scale as the Lehman Brothers collapse of 2008. Nevertheless, investors and regulators are closely monitoring the situation, and it will be important to see how it plays out in the coming weeks and months. This blog post has provided answers to some of the most frequently asked questions about the SVB crisis, but it is important to stay informed and continue to monitor developments as they unfold.