Silicon Valley Bank：The Silicon Valley Bank Collapse Explained

Through its nearly four decades of existence, Silicon Valley Bank served numerous tech startups and became the largest bank by deposits in Silicon Valley. Over a period of just two days in March 2023, the bank went from solvent to broke as depositors rushed to SVB to withdraw their funds, resulting in federal regulators closing the bank for good on March 10, 2023.

SVB’s collapse marked the second largest bank failure in U.S. history after Washington Mutual’s in 2008. While bank failures aren’t uncommon, it’s rare to see banks of SVB’s size become insolvent. When these rare occurrences happen, questions arise about how they can be prevented.

In the following conversation, UW Law Professor Anita Ramasastry provides background on this matter and answers questions surrounding bank failures.

UW Law: Why have banks, such as Silicon Valley Bank, failed in 2023?

Anita Ramasastry (AR): The Silicon Valley Bank failure is the largest bank failure si...