Silicon Valley Bank collapsed after years of bad investments, harming the millions who falsely trusted SVB with their money. The bank lost its customers billions of dollars, continuing a horrifying trend of recent implosions in the financial industry.

The fall of one of the world’s biggest banks could be explained by two major mismanagement events. The first reason for the fall was their investments in “safe” government bonds. A bond is a way for the government and companies to raise money. Bonds are basically loans to corporations. The money invested in these bonds is then paid back to the people who bought them at a fixed interest rate. These government bonds were at a relatively low fixed interest rate. Interest rates then began to skyrocket, causing these bonds to be worth less money. The bonds were sold at a huge loss of 1.8 billion dollars, putting SVB in a large amount of debt. The majority of SVB’s money was invested in these bonds. Alexander Yokum, an analyst for CFRA (Certified Financial Research Administrator) research, had an opinion about this: “This has proven that having 50 percent or more of your business in one industry is very dangerous. They outperformed on the way up, but on the way down, that’s when you figure out how exposed you are.”

Secondly, the downturn in tech company stocks killed SVB. Because of SVB’s location in Silicon Valley, their main depositors were small startup tech companies that were funded by venture capital, which is investment in companies in the hope that the companies will grow. In 2022 or 2023, investors started losing faith that these startups would turn a profit. In consequence, the venture capital stopped flowing through these companies, thus stopping the cash flow to SVB.

The collapse of SVB became evident once they started to try and offload stock in their company to investors. SVB then attempted to sell their company as a whole, which scared investors. Almost every investor pulled their money out from under the bank, causing an implosion similar to the fall of Jenga Towers. SVB had $209 billion in assets and $175.4 billion in deposits at the time of its failure, hurting everyone from the average tech startup employee to huge corporations like Roblox and Etsy. By March 10th, SVB was freely falling at a rate that had not been seen since the Lehman Brothers bank collapse. On March 12th, the bank was bankrupt and defunct.

The government decided to step in and help SVB’s former depositors. First of all, the FDIC allowed for accounts that had more than the federally insured $250,000 deposited to be refunded their money. Secondly, Joe Biden made a statement saying, “Americans can have confidence that the banking system is safe… Your deposits will be there when you need them.”

The collapse of SVB was years in the making after the bank created its own bad luck. Millions of people lost billions of dollars collectively, marking the second-biggest collapse in banking history.