Three Years Ago, Democrats Saved Silicon Valley. Its Billionaires Would Rather You Forget That.

"The bank had bought a lot of bonds, which got less valuable as the Federal Reserve raised interest rates after keeping them low during the thick of COVID-19. The bank's depositors were predominantly tech companies, who were worried that their money wouldn't be there if they needed to withdraw. So a lot of them rushed to do just that, and there wasn't enough money, and that was the end of Silicon Valley Bank as we once knew it."

"Within days, the government said that it would make all of the bank's depositors whole, even those who had far more than the standard FDIC-insured amount of $250,000 at the bank. Crisis averted. The U.S. banking system still stands to this day."

"Wall Street worried about the trouble spreading too. Banks depend on most of us having the confidence that our money will be there when we all ask for it, lest we all ask for it simultaneously, while some of our money is tied up in investments. Two other banks did go down around the same time as SVB, so the theory wasn't rooted in nothing."

Three years ago, Silicon Valley Bank failed after the Federal Reserve raised interest rates, causing bonds it held to lose value. Tech company depositors, fearing their money wouldn't be accessible, rushed to withdraw funds simultaneously. The bank lacked sufficient liquidity to meet these demands. Prominent tech investors publicly pressured the Biden administration for intervention. Concerns about contagion spread to other financial institutions, with two additional banks failing around the same time. Federal regulators responded by guaranteeing all SVB depositors would be made whole, exceeding standard FDIC insurance limits of $250,000. This government action stabilized the banking system and prevented broader financial crisis.

Read at Slate Magazine