The California bank was brought down by an old-fashioned bank run.
The collapse of Silicon Valley Bank , a 40-year-old California-headquartered bank that had become a startup tech sector favorite, has shaken the financial world in the past few days.
The company, which grew to be the 16th-largest bank in the U.S. despite remaining relatively unknown to the public, had a boom during the pandemic years, when the startup tech sector prospered. As more and more homebound people spent money on tech gadgets and similar items, tech companies used SVB to hold their cash, much of it used for payrolls and business expenses.
These investments didn't look bad back then, as the bank was likely to hold on to the bonds for some time and see them through to maturity. But several recent factors combined to turn these financial decisions into the beginning of SVB's demise.
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