Editor TLN
The story of the fall of Silicon Valley Bank began in 2022 with the Federal Reserve raising interest rates to contain inflation. Tech companies reduced their appetite for new loans because they were no longer cheap. Instead of going into debt, they turned to savings to run their businesses, a situation that Silicon Valley Bank did not foresee. To respond to the high demand for cash, the bank went out to sell the 30-year treasury bonds in which it had invested savers’ money. The bank had to offer the bonds at a lower price and lost money in that operation. Some clients interpreted it as a lack of solvency. What came next was a hectic day of withdrawing money from the entity. In less than 48 hours, the 40-year-old bank collapsed, and the government was forced to intervene to prevent a domino effect on the financial system.
