Silicon Valley Bank survived the dot-com crash and the Great Recession, but SVB was no match for Powell’s hawkish Fed.
Silicon Valley Bank SIVB has long been an integral part of the Silicon Valley startup scene, lending money to venture-capital-backed companies and holding their operating cash as bank deposits. SVB has always been vulnerable to startup booms and busts — nearly drowning during the popping of the dot-com bubble and during the Great Recession of 2007-2009 but it did survive.The...
As interest rates rose, savings and loan associations that had financed long-term mortgages with short-term deposits were crushed. The aggregate net worth of S&Ls fell to a negative $44 billion at the end of 1981 from positive $23 billion at the end of 1977. The S&L industry was bankrupt. Almost a quarter of the S&Ls operating in the 1970s collapsed or merged in the early 1980s.
An obvious solution is to eliminate the duration mismatch by moving to shorter-term loans and longer-term liabilities. Another strategy is to use options and futures to hedge their interest rate risk — if rising interest rates cause capital losses on their mortgages and other long-term assets, these can be offset by capital gains on their bond options and futures.It has now been 40 years since the S&L crisis and some lessons have evidently been forgotten.
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Silicon Valley Bank spooks Silicon ValleySilicon Valley Bank, long one of the most popular financial institutions among tech and life sciences startups, saw its shares fall more than 60% on Thursday, wiping out a whopping $9.4 billion in market value.
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Silicon Valley bites the hand that feeds it in SVB bank runSilicon Valley Bank was forced to shutter after its core depositors — startup companies — took their money out in a shocking bank run, leaving many...
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SVB Financial's surprise deposit drop causes mayhem with Silicon Valley lenderA cauldron of trouble from lack of deals to a cash crunch in the tech sector as a surprise drop in deposits causes SVB Financial to scramble for its life.
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Silicon Valley investors and founders express shock at sudden collapse of SVBThe technology industry is struggling to make sense of and account for potential repercussions of Silicon Valley Bank's sudden collapse.
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