March 13, 2023 Latest on the Silicon Valley Bank collapse

Treasury Department officials have paid especially close attention to the flows of deposits in the wake of their actions Sunday to extend a federal backstop to all of Silicon Valley Bank’s deposits in order to ensure access to all of those funds on Monday.

And the department has seen signs that deposit outflows from small and midsized lenders have slowed, according to a senior Treasury official.

White House and Treasury Department officials spent the day in contact with regulators and bank executives as they monitored the effect of their dramatic emergency actions over the weekend.?

While the early reports don’t mean the risks have dissipated, they do signal that a central component of the administration’s strategy – sending a clear message to depositors that their deposits were, in fact, safe – has had an effect.

While regional bank stocks have been hammered throughout the day, there’s also some cautious optimism that their efforts are having an effect as Wall Street firms – most notably JPMorgan – have opened up new lines of credit to some of the most at-risk banks.?

Smaller lenders, also viewed as potentially at risk in the event of contagion, have reported stable conditions.?

It’s clear, however, that administration officials are bracing for – and moving quickly to try and frame – the political fallout. President Joe Biden’s remarks before departing for his West Coast trip included implicit nods to that reality.

The focus on new regulations is tied to that, as was Biden’s explicit, and repeated, assurances that taxpayer dollars are not at risk.?

After Silicon Valley Bank’s stunning collapse became the second-largest bank failure in US history, many customers are wondering if their money is safe.

Here are the answers to some frequently asked questions:

Do I have to worry about cash stored in my bank?

In short, if you have less than $250,000 in your account, then you almost certainly have nothing to worry about. That’s because the US government insures the first $250,000 in eligible accounts.

Many SVB customers had much more than $250,000 deposited and now that they can’t get their money, some companies are struggling to make payroll.

Should I pull my money out of my bank?

No, it doesn’t make sense to take all your money out of a bank, Jay Hatfield, CEO at Infrastructure Capital Advisors and portfolio manager of the InfraCap Equity Income ETF, said. But make sure your bank is insured by the FDIC, which most large banks are.

Your money is most likely not going anywhere. Everyday consumers, on the whole, are unlikely to be affected. But the collapse is a good reminder to be aware of where your money is held, and not to have it all in one place.

“The first bank failure since 2020 is a wake-up call for people to always make sure their money is at an FDIC-insured bank and within FDIC limits and following the FDIC’s rules,” said Matthew Goldberg, a Bankrate analyst.

How does this compare to 2008?

The banking sector should be, theoretically, more stable due to the regulatory reforms put in place after the crisis in 2008.

The government’s actions this weekend also try to prevent the next SVB from happening, further stabilizing the sector after a chaotic week. Rising interest rates meant cheap Treasury bonds SVB and other banks invested in years ago crumbled in value – last week’s bank run was triggered by SVB selling those securities at a steep loss to help pay customers’ deposit withdrawals after people started pulling their money out of the bank.

The Fed also said it will offer bank loans for up to a year in exchange for US Treasury bonds and mortgage-backed securities that lost value. The Fed will honor the debt’s original value for the banks that take the loans.

Find more answers.

Republican presidential candidate Nikki Haley participates in a conversation with Senator Joni Ernst (R-IA) hosted by the Bastion Institute on March 10, 2023 in Clive, Iowa.

Republican presidential candidate Nikki Haley on Monday criticized the Biden administration’s efforts to contain the fallout from two bank failures in recent days, arguing “taxpayers should not be responsible.”

CNN?has reported?US taxpayers will not be on the hook for either facility, according to regulators.

How this works: The Biden administration will draw from the Deposit Insurance Fund to backfill customers’ deposits, Biden said Monday,?reiterating comments?from the heads of Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation that the plan would not be funded by taxpayers.

“No losses will be — and this is an important point — no losses will be borne by the taxpayers; let me repeat that, no losses will be borne by the taxpayer,” Biden said in remarks delivered from the White House. “Instead the money will come from the fees that banks pay into the Deposit Insurance Fund.”

The FDIC’s?Deposit Insurance Fund (DIF)?is used to help pay for operating costs as well as to resolve failed banks. It’s funded by quarterly fees collected from FDIC-insured banks as well as interest earned from its investments in Treasury securities.?

As of December 31, 2022, the DIF’s fund balance was $128.2 billion, according to the FDIC.

Senate Majority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries said Monday that Congress will look at the causes of the recent bank failures.

Schumer and Jeffries also praised President Joe Biden’s handling of the situation so far. The president directed his administration to take a series of actions including backstopping depositors’ funds, making sure taxpayers are not on the hook for these moves, holding those responsible accountable and declining to extend relief to investors of Silicon Valley Bank.

Federal Deposit Insurance Corp. officials declined a bid to purchase assets from the failed Silicon Valley Bank during an auction that took place this weekend, but that doesn’t mean their efforts to secure a sale of the bank’s assets are finished, sources familiar with the matter say.?

Officials who briefed Senate Republicans on the dramatic government actions taken in response to the failure of Silicon Valley Bank and Signature Bank said they were weighing plans for a second auction in the future, the sources said.

The timeline for a second auction was not clear, but the officials noted that the government action to backstop uninsured deposits, as well as the creation of a Federal Reserve-operated emergency lending facility for small and mid-sized banks, created new conditions that may make lenders more willing to submit bids to purchase the failed bank’s assets, the sources said.?

Biden administration officials worked furiously throughout the weekend in an effort to find a buyer for the bank’s assets before ultimately deciding to launch the dual-pronged emergency actions.?

The FDIC solicited bids from other banks to potentially purchase Silicon Valley Bank. But one senior Treasury official noted on Sunday that “things moved very quickly” and that the decision was made to “move early” and trigger the systemic risk exception — a designation that provides?more leeway to?immediately advance funds to those holding deposits above the current $250,000 threshold covered by FDIC.?

The official noted it would have been “pretty difficult” for a potential buyer to have gone through SVB’s books, agreed to purchase the assets and been in a position to open for business on Monday.?

Instead, the FDIC transferred all of the bank’s deposits and assets?to a government-operated “bridge bank” that opened and resumed normal banking hours and business operations.??

The blame game is on for who caused Silicon Valley Bank’s collapse, and the tech sector is pointing the finger at SVB CEO Greg Becker for allowing his company to go down in history as the second-biggest US banking failure on record.

One Silicon Valley Bank employee, who requested anonymity to speak candidly, was dumbfounded by how Becker publicly acknowledged the extent of the bank’s financial troubles before privately lining up the necessary financial support to ride out the storm.

This set the stage for the panic that ensued as customers scrambled to pull their money.

What happened: Becker and his leadership team revealed last Wednesday night a hope (but no firm commitment) to raise $2.25 billion in capital as well as $21 billion in asset sales that sparked a $1.8 billion loss.

That news set off a wave of fear across Silicon Valley, where the bank serves as a key lender to tech startups. Many of them panicked,?yanking $42 billion last Thursday alone?when Silicon Valley Bank’s stock crashed by 60%, according to filings by California regulators.

By the close of business that day, Silicon Valley Bank had a negative cash balance of about $958 million.

The Silicon Valley Bank insider said the mismanagement of the bank’s balance sheet heading into last week was “stupidity” and questioned the strategy of the CEO and CFO.

Still, the employee, who is a Wall Street veteran, emphasized his belief that the downfall of Silicon Valley Bank was brought on by errors and “naivety,” not outright wrongdoing.

The Marriner S. Eccles Federal Reserve building in Washington, DC, on Monday, March 13,?

The Federal Reserve announced Monday it has launched a review of the supervision and regulation of Silicon Valley Bank following the lender’s sudden implosion.

The?Fed?said the review will be run by Michael Barr, the central bank’s vice chair for supervision, and the results will be publicly released by May 1.

The review comes just days after Silicon Valley Bank collapsed, raising questions about how regulators — including those at the?Fed?itself — missed the trouble that was brewing.

Stocks closed mixed on Monday after a volatile trading day as investors mulled over federal regulators’ plan to stymie effects from the collapse of Silicon Valley Bank and Signature Bank.

Stocks teetered throughout the day as investors assessed the US government’s actions and how upheaval in the banking sector will affect the Federal Reserve’s monetary policy going forward.

The VIX, which measures market volatility, reached its highest level since late 2022 as shares of US regional lenders dipped in and out of trading halts Monday. Shares of Western Alliance tumbled 47%. First Republic Bank tanked about 62%. Even the larger banks were affected: Wells Fargo fell by roughly 7% and Citigroup dropped by 7.4%.

The 2-year Treasury note, meanwhile, posted its largest three-day yield drop since the Black Monday stock crash in October of 1987.

Tuesday’s Consumer Price Index inflation report for February will offer more clues about inflation rates and future interest rate hikes.

The?Dow?fell 91 points, or 0.3% in trading on Monday.

The?S&P 500?was 0.2% lower.

The?Nasdaq Composite?gained 0.5%.

Traders work on the floor at the New York Stock Exchange in New York, Monday, March 13, 2023.

Stocks teetered but held on to their gains by mid-afternoon Monday, as Wall Street mulled over the government’s plan to keep banks afloat.

The Nasdaq Composite climbed 1.3%, leading the major indexes’ gains. The S&P 500 gained 0.6% and the Dow rose 0.4%.

The US government raced to prevent further fallout in the bank sector over the weekend after the collapse of Silicon Valley Bank and Signature Bank. The Biden administration said it will backfill customer deposits at both banks.

That’s “gone a long way towards curing some of the crisis of confidence investors had in what occurred in the banking sector and its spillover to not only other banks and financial institutions, but maybe even ultimately the broader?economy,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

Treasury yields have fallen sharply, with 2-year notes seeing their largest three-day drop since Black Monday in October 1987. The drop in yields has helped “support those long-duration, high-growth sector securities that dominate, say for instance the tech or communications sector,” Luschini said.

Pedestrians pass in front of a Charles Schwab Corp. office building in New York City in April 2018.?

As shares of regional banks plummet, financial institutions are attempting to ease worries on Wall Street that they could face the same troubles that plagued Silicon Valley Bank.

Charles Schwab trimmed steep losses on Monday after putting out a statement that emphasized the company has access to plenty of cash.

Schwab said that more than 80% of its total bank deposits fall within insurance limits of the Federal Deposit Insurance Corporation, which insures up to $250,000.

“Schwab is well-positioned to navigate the current environment,” the company said, adding that it applauds regulatory efforts to support depositors and “bolster confidence across the American banking system.”

Schwab shares were down about 10% in recent trading, recovering a bit from an earlier selloff of as much as 23%.

Shares of Western Alliance, a Phoenix-based regional bank, plunged about 53% in recent trading even after attempting to ease investor concern.

“Western Alliance has taken additional steps to strengthen its liquidity position to ensure that we are in a position to meet all of our client funding needs, including increasing our borrowing capacity,” Western Alliance CEO Kenneth Vecchione said in a statement.

Western Alliance described deposit outflows as “moderate” and said cash reserves exceed $25 billion.

First Republic Bank on Sunday said its capital and liquidity positions are “very strong,” bolstered by tapping new cash from the Federal Reserve and JPMorgan Chase.?

Shares of First Republic Bank are down 65% in recent trading.

A view of the Park Avenue location of?Silicon?Valley?Bank?(SVB), in New York City, U.S., March 13, 2023.

Silicon Valley Bank?collapsed?with astounding speed on Friday. And while the US federal government?stepped in?to guarantee customer deposits, its downfall continues to?reverberate?across?global financial markets — as seen in the subsequent shutdown of Signature Bank — and investors are on edge about whether its demise could spark a?broader banking meltdown.

Here’s what you need to know about the biggest US bank failure since the global financial crisis in 2008:

Why did it collapse?: The root of its demise goes back several years. Like many?other banks, SVB ploughed billions into US government bonds during the era of near-zero interest rates. What seemed like a safe bet quickly came unstuck, as the Federal Reserve hiked interest rates aggressively to tame inflation.

When interest rates rise, bond prices fall, so the jump in rates eroded the value of SVB’s bond portfolio. The portfolio was yielding an average 1.79% return last week, far below the 10-year Treasury yield of around 3.9%, Reuters reported.

At the same time, the Fed’s hiking spree sent borrowing costs higher, meaning tech startups had to channel more cash towards repaying debt. At the same time, they were struggling to raise new venture capital funding. That forced companies to draw down on deposits held by SVB to fund their operations and growth.

Then the bank run: When SVB announced that it had sold a bunch of securities at a loss and would sell $2.25 billion in new shares to plug the hole in its finances, customers panicked and withdrew their money in large numbers.

The bank’s stock plummeted 60% Thursday and dragged other bank shares down with it. By Friday morning, trading in SVB shares was halted and it had abandoned efforts to raise capital or find a buyer. California regulators intervened, shutting the bank down and placing it in receivership under the Federal Deposit Insurance Corporation, which typically means liquidating the bank’s assets to pay back depositors and creditors.

In aiming to prevent further bank runs and helping companies pay staff and fund operations, US regulators?said?Sunday that they would guarantee all SVB customers’ deposits. The intervention does not amount to a 2008-style bailout, however, which means investors in the company’s stock and bonds will not be protected.

Will this trigger a banking crisis? There are already some signs of stress at other banks, and authorities in the US and across Europe are watching closely. Trading in First Republic Bank?(FRC)?and PacWest Bancorp?(PACW)?was temporarily halted Monday after the shares plunged 65% and 52% respectively. Charles Schwab?(SCHW)?stock was down 7% at 11.30 a.m. ET Monday.

In Europe, the benchmark Stoxx Europe 600 Banks index, which tracks 42 big EU and UK banks, fell 5.6% in morning trade — notching its biggest fall since last March. Shares in embattled Swiss banking giant Credit Suisse were down 9%.

SVB isn’t the only financial institution whose investments into government bonds and other assets have fallen dramatically in value. At the end of 2022, US banks were sitting on $620 billion in unrealized losses — assets that have decreased in price but haven’t been sold yet, according to the FDIC.

Another key headline: HSBC stepped in Monday to buy SVB UK for ￡1 ($1.2), securing the deposits of thousands of British tech companies that hold money at the lender. Had a buyer not been found, SVB UK would have been placed into insolvency by the Bank of England, leaving customers with only deposits worth up to ￡85,000 ($100,000) — or ￡170,000 ($200,000) for joint accounts — guaranteed.

Western Alliance Bank said Monday that it’s taking steps to fulfill its clients’ funding needs after troubles in regional banks sent its stock spiraling.

“As of this morning, cash reserves exceed $25 billion and are growing, while deposit outflows have been moderate. Including accounts eligible for pass-through insurance, insured deposits exceed 50% of total deposits,” CEO Kenneth Vecchione said in a statement.

Shares of the bank fell 60% Monday morning, reaching a new 52-week low. The stock was one of several regional bank stocks that moved in and out of trading halts as Wall Street grappled with the collapse of Silicon Valley Bank and Signature Bank.

Banking stocks remained down Monday, even as markets managed to reverse their earlier losses.

A First Republic Bank branch in New York on March 10.

First Republic Bank shares plunged by about 66% in trading on Monday despite the regional lender announcing steps to shore up its finances.

Shares of other regional banks and financial firms are also stumbling, signaling continued nervousness among investors even after federal regulators stepped in late Sunday to protect depositors at Silicon Valley Bank, which failed Friday, and Signature Bank, which was shut down on Sunday.

Charles Schwab was down more than 11% on Monday afternoon after recovering from a 23% drop earlier in the day —?its largest daily decline on record.

The drop came even as Schwab executives worked to assure customers that the bank is stable. “We have access to significant liquidity, including an estimated $100 billion of cash flow from cash on hand, portfolio-related cash flows, and net new assets we anticipate realizing over the next twelve months,” said chief financial officer Peter Crawford in a monthly activity statement.

San Francisco-based First Republic, meanwhile, announced?fresh funding from the Federal Reserve and JPMorgan Chase?on Sunday to strengthen its balance sheet.

The moves mean First Republic now has $70 billion in unused liquidity — firepower it can use to respond to potential customer withdrawals.

“First Republic’s capital and liquidity positions are very strong, and its capital remains well above the regulatory threshold for well-capitalized banks,” Jim Herbert, First Republic’s founder and executive chairman, and CEO Mike Roffler said in a statement.

The lender reached out to customers over the weekend in a bid to reassure them.

Etsy, a hugely popular online marketplace for artisans to list and sell handmade items, told CNN Business it experienced a delay in issuing payments to some sellers because of the unexpected collapse of Silicon Valley Bank.?

“We understand how important it is for these small businesses to be able to receive their funds when they need them. This impacted a small group of sellers, approximately 0.5% of our active seller base,” an Etsy spokesperson said in an email to CNN Business on Monday.?

Etsy Marketplace, which has 5.4 million global sellers worldwide, has accounts with multiple banks. It said its account SVB held a a low single-digit percentage of its total cash.

The company said it has started processing payments via another payment partner on Monday.

People walk past the U.S. Department of Treasury building on March 13 in Washington, DC.

Senate Republicans are currently receiving a briefing from the Treasury Department on the collapse of Silicon Valley Bank, Sen. Tim Scott’s spokesperson told CNN.?Scott is on the Senate Banking Committee.

The briefing comes after several Republicans on the committee were not included on invitations for an all-member briefing by the Treasury last night. Some of those members were able to join the briefing very late after flagging the issue to the Treasury, but this briefing today is intended to keep members across the aisle in the loop.

A trader works at the post where?First?Republic?Bank is traded on the floor of the New York Stock Exchange on March 13.

The Biden administration scrambled this weekend to restore confidence in the US banking system after the collapse of Silicon Valley Bank and Signature Bank.

But investors signaled in Monday trading that the plan wasn’t enough. Stocks of regional banks tumbled to record lows in Monday trading and were in and out of trading halts as their share prices moved remained volatile.

So what explains the post-backstop plan plunge?

Wall Street remains worried that the Federal Reserve’s aggressive interest rate hikes will continue to roil regional banks.

Markets are anxious to know “whether the Fed will lift rates at all, or will they announce a pause in the monthly Quantitative Tightening program. Or both,” said Quincy Krosby, chief global strategist for LPL Financial.

It will be difficult to get an answer. The Fed just entered its mandated quiet period ahead of its policy meeting next week.

JPMorgan’s David Kelly said in a note Monday morning that the Biden administration’s plan may help a bit, but markets won’t be satisfied until the Fed makes a decision around interest rates.

“These actions may be sufficient to stem some of the current turmoil in global markets emanating from smaller US banks,” he said. “However, it should be noted that these problems were largely set up by over-easy Fed policy for many years and are now being triggered by excessive tightening.”

Back when interest rates were near zero, US banks scooped up lots of Treasuries and bonds. Now, as the Fed hikes rates to fight inflation, those bonds have declined in value.

When interest rates rise, newly issued bonds start paying higher rates to investors, which makes the older bonds with lower rates less attractive and less valuable.

The result is that US banks now have a large amount of unrealized losses on their books and may lack liquidity.

Treasury yields, meanwhile, have receded to historic lows — 2-year notes have fallen more than 100 points since Wednesday and are on track to notch their largest three-day drop since Black Monday in October 1987 — as Wall Street worries about about the economic and market fallout of the bank failures.

“The move into the Treasury market reflects?concern?that the administration’s attempts to calm investor anxiety won’t work, and that ensuing panic and fear could quickly?lead to the dreaded “contagion” that envelops the market’s psyche,” said Krosby.

Stefan Kalb, co-founder and CEO of Seattle-based startup Shelf Engine, during his interview with CNN.

If the US government had not intervened with the steps they did, a Seattle-based startup called Shelf Engine that had all its money stored at Silicon Valley Bank would have shut down, says its co-founder and CEO Stefan Kalb.

The hours since Thursday afternoon had been stressful, he said, recounting the notes he got from colleagues and investors, urging him to pull money out of SVB. When he opened another account and tried to wire all his money, it wasn’t honored, and that’s when he said he?knew he was stuck.

“As a co-founder and CEO, I’m personally liable for that payroll. Which means that if I would have let our team?work past Friday, I would have?had to somehow cover that personally, and?I just could not let that happen,” he told CNN.

He listed a few reasons for why he put all of the startup’s money at Silicon Valley Bank:

Finally, he said he was “quite relieved” after hearing from President Joe Biden on the administration’s actions after the collapse. “I think this administration has taken this on exactly the way the way I it?should be. That is the depositors of the?bank need to be made whole.?This a cornerstone of the US economy.”

Traders work on the floor of the New York Stock Exchange during morning trading on March 13.

US stocks rose Monday, reversing earlier losses as investors grew their bets that the Federal Reserve will pull back on its aggressive rate-hiking campaign due to issues brewing among regional banks.

By mid-morning, the Dow was up 0.5%. The S&P 500 and Nasdaq gained 0.6% and 1.17%, respectively.

The CME FedWatch Tool showed a possibility of around 36% that the central bank would not raise its benchmark lending rate at its upcoming meeting, and a roughly 64% possibility of a quarter-point increase. The figures have remained volatile as investors mull over the financial crises at US regional banks and the government’s effort to contain them.

The Biden administration said that it will backfill customers’ deposits at the collapsed Silicon Valley Bank and Signature Bank, assuaging fears that American taxpayer dollars would be used.

The Securities and Exchange Commission said it’s on the watch for misconduct that could further disrupt the market.

Bank stocks continued their slide despite the market’s newfound strength.

Switzerland’s financial regulator Finma said Monday it is on alert for any signs of potential fallout for the country’s banks and insurers following the collapse of Silicon Valley Bank and Signature Bank.

“As is customary in such incidents, Finma is evaluating the direct and indirect exposure of the banks and insurance companies it supervises to the institutions concerned,” it said in a statement. “The aim is to identify any cluster risks and potential for contagion at an early stage.”

Finma also said it was monitoring the collapse of crypto-focused lender Silvergate, which entered liquidation voluntarily on Wednesday.

Silvergate said it would repay all deposits before winding down operations.

Shares in Swiss lenders slid Monday, tracking losses in the sector globally. Embattled Credit Suisse tumbled nearly 13% to a new record low. Shares of its bigger Swiss rival, UBS, fell 8%.

The cost of buying insurance against the risk of Credit Suisse defaulting on its debt rose to an all-time high, while the price of some of its bonds fell sharply, according to Reuters.

Credit Suisse, once a big player on Wall Street, has been hit by a series of missteps and compliance failures over the past few years that have damaged its reputation and profit. The bank posted its biggest annual loss in 2022 since the financial crisis in 2008, as customers withdrew 111 billion Swiss francs ($121 billion) in the three months to December.

A person shops in a supermarket on February 13 in Los Angeles, California.

Americans are expecting relief from high inflation within the next year, according to Federal Reserve Bank of New York survey data released Monday.

One-year inflation expectations dropped sharply in February to levels not seen since May 2021, tumbling 0.8 percentage points to 4.23%. Consumers indicated they expect to get some relief in how much they pay for food, rent, medical care and gas, according to the New York Fed’s Survey of Consumer Expectations. However, those surveyed said they expect median home prices to rise 1.4%.

Measurements of inflation expectations are closely watched by Fed officials as they seek to bring down the highest inflation seen in decades.

On the three- and five-year horizons, inflation expectations held mostly steady: Median expectations for inflation three years from now ticked down 0.5 percentage points to 2.66% and increased by 0.1 percentage points to 2.6%.

What’s desired is for expectations to be “anchored” at roughly 2%, which is the Fed’s target rate. If inflation expectations run high, then there is a concern that could cause workers to demand pay raises to counter their lost purchasing power, and the fear would be that business raise prices in turn and ultimately push up inflation.??

Consumers are still expecting to see a strong job market over the next 12 months: Year-ahead earnings growth expectations held firm at 3% and unemployment expectations fell by 1.8 percentage points.

Still, consumers are also expecting to pull back on how much more they’re spending. Household spending growth expectations fell to 5.6% last month, marking the fourth consecutive decline.?

The headquarters of the US Securities and Exchange Commission (SEC) is seen in Washington, DC, in January 2021.?

After the panic that caused the collapse of Silicon Valley Bank, the Securities and Exchange Commission (SEC) says it’s on high alert for any potential misconduct that threatens market stability.?

“In times of increased volatility and uncertainty, we at the SEC are particularly focused on monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly,” SEC Chair Gary Gensler said in a?statement.??

The warning follows a bank run at SVB, where panicked customers pulled $42 billion on Thursday alone.?

“Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal securities laws,” Gensler said.?

NY State Governor Kathy Hochul on March 10 in New York City.

New York Gov. Kathy Hochul said Monday that she pushed the federal government to offer the same protections to Signature Bank’s depositors as Silicon Valley Bank’s.

The New York State Department of Financial Services closed Signature Bank on Sunday night and appointed the Federal Deposit Insurance Corporation (FDIC) as a receiver, according to a press release from the FDIC Sunday.

All depositors of the institution will be made whole, the press release reads, and “no losses will be borne by the taxpayers.”

Hochul said she “pushed hard” for the protections, and stressed, “this is not a bailout.”

“This is simply using fees that are assessed on all banks by the FDIC in such a time they would need them,” she said, adding that her office was “successful in persuading the federal government to include Signature and all of its customers in its protections.”

Signature Bank’s seizure did not happen in a vacuum, and it “truly was in response to what happened at SVB,” the governor said.

Signature Bank had total assets of $110.4 billion and total deposits of $82.6 billion as of December 31, according to the FDIC.

Rep. John Garamendi praised President Joe Biden’s “extraordinary leadership” in the aftermath of the Silicon Vally Bank collapse.

Garamendi also countered the suggestion that SVB may be getting a bailout.

“The moral hazard here doesn’t disappear,” Garamendi said. “That’s the way it should be.”

The US representative from California also partially blamed today’s situation on the Federal Reserve’s policy of steeply raising interest rates to counter inflation, and he cautioned against a further rapid rate increase.?

He criticized Fed Chair Jerome Powell, saying “his solution is to throw Americans out of work, to put Americans on the bread lines. I’m sorry, that is not the right solution.”

A pedestrian walks outside the headquarters of the U.S. Federal Deposit Insurance Corp., in May 2009.

Banks, not taxpayers, are funding the government’s efforts to shore up depositors of the failed Silicon Valley Bank and Signature Bank.

The Biden administration will draw from the Deposit Insurance Fund to backfill customers’ deposits, President Joe Biden said Monday, reiterating comments from the heads of Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation that this relief plan would not be funded by American taxpayers.

“No losses will be — and this is an important point — no losses will be borne by the taxpayers; let me repeat that, no losses will be borne by the taxpayer,” Biden said Monday in remarks delivered from the White House. “Instead the money will come from the fees that banks pay into the Deposit Insurance Fund.”

The FDIC’s Deposit Insurance Fund (DIF) is used to help pay for operating costs as well as to resolve failed banks. It’s funded by quarterly fees collected from FDIC-insured banks as well as interest earned from its investments in Treasury securities.?

As of December 31, 2022, the DIF’s fund balance was $128.2 billion, according to the FDIC.

Under requirements put in place by the Dodd-Frank Act, the FDIC has to have enough in the DIF coffers to cover 1.35% of insured deposits.

The?European Union?Commission is monitoring the situation following Friday’s collapse of Silicon Valley Bank, the biggest failure of a US bank since 2008, a spokesperson said.

Traders work on the floor of the New York Stock Exchange today during morning trading.

US stocks opened lower Monday as traders digested the plan by federal banking regulators to make the depositors in the failed Silicon Valley Bank whole and provide additional funding for other banks.?

Stock futures popped on Sunday after the deal was announced, but quickly fell on Monday as fear rippled through markets that the government may not have done enough to restore confidence in the US banking system.

Shares of US banks, particularly regional banks, dropped in early trading Monday.?

JPMorgan Chase was down 2% and Citigroup fell by 3.4%. Regional lenders notched some of the largest drops in the market. First Republic Bank was down more than 65%, Western Alliance Bancorp sank 73% and PacWest Bancorp fell 35.5%.?

President Joe Biden delivered remarks Monday to assure Americans that the banking system is safe after the collapse of Silicon Valley Bank and Signature Bank but added that investors in bank stocks would not be protected. “They knowingly took a risk and when the risk didn’t pay off investors lose their money. That’s how capitalism works,” he said.?

2-year Treasury yields, meanwhile, have fallen more than 100 points since Wednesday and are on track to notch their largest three-day drop since Black Monday in October 1987.?

The sudden outbreak of financial trouble at US regional banks, meanwhile, has led Goldman Sachs economists to forecast that the Federal Reserve will pause rate hikes at its policy meeting next week. The probability of no hike was at about 22% on Monday morning (though the number was moving quickly and swinging with great volatility), according to the CME FedWatch Tool, up from 0% on Friday.

The Dow was down 243 points, or 0.8%, on Monday morning.

The S&P 500 fell by 1.1%.

The Nasdaq Composite was 0.9% lower.

US President Joe Biden speaks about the US banking system today in the Roosevelt Room of the White House in Washington, DC.?

President Joe Biden addressed the nation Monday to assure Americans that the banking system is safe after the collapse of Silicon Valley Bank and Signature Bank. In his speech, he highlighted the immediate action that his administration has taken.

Customers’ deposits will be protected: Customers will “have access to?their money as of today.?That includes small businesses?across the country that bank?there and need to make payroll,?pay their bills and stay open?for business,” Biden said, adding that no losses will be suffered by the?taxpayers.

“Instead, the money will come?from the fees that banks pay?into the deposit insurance fund,” he explained.

The management of these?banks will be fired:?“If the bank is taken over by?FDIC, the people running the?bank should not work there anymore,” Biden said.

Investors in the banks?will not be protected:?“They knowingly took a risk and?when the risk didn’t pay off,?investors lose their money.?That’s how capitalism works,” Biden added.

Logging a full account of what happened: Biden stressed the importance of holding those responsible accountable. “In my administration, no one is?above the law,” he said.

Reducing the?risk of this happening again: Citing the requirements put in place during the Obama administration,?including the Dodd-Frank Act, Biden said there were rules in place to prevent a repeat of 2008. But he added that the Trump administration rolled some of these regulations back.

“I’m going to ask Congress and?the banking regulators to strengthen the rules for banks, to?make it less likely this kind of?bank failure would happen again,” he said. “And to protect American jobs and?small businesses.”

Reassuring that while the banking system is safe, he also said the administration will not stop at this.

US President Joe Biden on Monday addressed the nation after the collapses of Silicon Valley Bank and Signature Bank, and said, “Americans can?have confidence that the banking?system is safe.”

When President Joe Biden speaks in the next hour following the dramatic actions his administration last night to try to contain Silicon Valley Bank’s collapse, he plans to emphasize that the US banking system is “safe,” according to a White House official.

“The president will tell Americans they can have confidence that our banking system is safe, and their deposits will be there when they need them,” the White House official said.

The remarks, which were announced last night, will be an effort by Biden himself to directly explain to the public what exactly he has instructed his administration to do to protect small businesses and workers in particular.

The actions he’ll emphasize include backstopping depositors’ funds, taxpayers not being on the hook for these moves, holding those responsible accountable and not extending relief to investors of Silicon Valley Bank.

It remains to be seen how exactly Biden plans to hold those responsible “accountable” – and who he deems responsible for the collapses.

Investors are dumping bank stocks Monday, extending Friday’s losses, despite dramatic weekend moves by the US and UK governments to shore up confidence in the financial system following the collapse of Silicon Valley Bank.

The Biden administration said Sunday that it would guarantee all SVB’s deposits held by American customers, while the British government helped orchestrate the sale of SVB UK to global banking giant HSBC, averting its insolvency.

The shares of other major European banks were also being dumped: Barclays fell 4.2%, Deutsche Bank 5.5% and Italy’s Unicredit 7.5%.

Smaller US banks were even worse off. Shares in First Republic and PacWest Bancorp cratered 60% and 35% respectively in pre-market trading.

The falls have heightened fears that the second-biggest banking collapse in US history may be sparking contagion in the sector that could lead to further failures.

“Investors have still been shaken by the events of the past few days,” aid Susannah Streeter, head of money and markets at investing platform Hargreaves Lansdown, adding that investors are waiting to see if there will be a spillover, creating a pool of fresh problems.

“The pre-market freefall of shares in First Republic bank in the US has added heightened worry to those concerns. There is expectation that weaknesses remain in pockets of the system and the US Treasury may have to step in with further guarantees of deposits at other banks and at least lift the ceiling of the insured deposit guarantees,” she said.

Federal Reserve Chair Jerome Powell testified before the Senate Banking Committee on March 7 in Washington, DC.?

Just last week, markets were convinced that Federal Reserve Chairman Jerome Powell had opened the door to an aggressive half-point interest rate hike at the central bank’s policy meeting next week.

On Monday, Wall Street attempted to close that door.

Citing the sudden outbreak of financial trouble at US regional banks, Goldman Sachs economists wrote in a note Monday that they no longer expect the Fed to deliver a rate hike at all.

The probability of no hike was at about 30% in pre-market trading Monday (though the number was moving quickly and swinging with great volatility), according to the CME FedWatch Tool, up from 0% on Friday.

That’s because many on Wall Street believe that the Fed’s aggressive regimen of rate hikes has undercut the value of bonds and could trigger a recession. They blame the current tightening cycle for the regional banking crisis spurred by rapid withdrawals from Silicon Valley Bank and Signature Bank.

Goldman Sachs had previously predicted that the Fed would raise interest rates by a quarter point at its meeting next week, but Goldman’s Jan Hatzius?wrote in a note Monday that there was now “considerable uncertainty” about the central bank’s path forward.

While calls have increased for the Fed to pause its tightening cycle, “the reality is somewhat more complex, and those betting on the Fed to end its tightening cycle early because of current banking sector stress may be misguided,” wrote EY Chief Economist, Gregory Daco. He’s projecting that the Fed will hike interest rates by a quarter point next week.

Michael Feroli, chief US economist at JPMorgan Chase, also wrote on Sunday that he was expecting a quarter-point rate hike.

The Federal Reserve, meanwhile, has entered the quiet period ahead of its policy meeting next week and cannot comment or issue guidance on the way forward.

Additionally, 2-year Treasury yields tumbled by half a percentage point Monday morning to just under 4.1% and are on pace to hit their largest three-day decline since Black Friday in October 1987.

US President Joe Biden delivers remarks in Washington, DC, on March 1.

President Joe Biden is set to address the developing situation in the US banking system at 9 a.m. ET, according to the pool.

“Yes. I’ll talk to you tomorrow morning,” Biden told reporters Sunday in response to a question about addressing the situation as he boarded Air Force One to return to the White House.??

Biden will deliver remarks before departing for San Diego where he is scheduled to meet the prime ministers of the United Kingdom and Australia.

Silicon Valley Bank CEO Greg Becker speaks during a conference in Beverly Hills, California, in 2022.

One Silicon Valley Bank employee, who requested anonymity to speak candidly, pointed the finger at CEO Greg Becker for allowing the company to go down in history as the second-biggest US banking failure on record.?

The employee said they were dumbfounded by how Becker publicly acknowledged the extent of the bank’s financial troubles before privately lining up the necessary financial support to ride out the storm.??

This set the stage for the panic that ensued as customers scrambled to pull their money.??

“That was absolutely idiotic,” the employee, who works on the asset management side of Silicon Valley Bank, told CNN in an interview. “They were being very transparent. It’s the exact opposite of what you’d normally see in a scandal. But their transparency and forthrightness did them in.”

Silicon Valley Bank did not respond to requests for comment but Becker has reportedly apologized to employees about the situation.?

Because Silicon Valley Bank had sufficient capital far in excess of regulatory requirements, the announcement of an unsubscribed $2.25 billion capital raise Wednesday night was “unnecessary,” according to Jeff Sonnenfeld, CEO of the Yale School of Management’s Chief Executive Leadership Institute (CELI) and Steven Tian, CELI’s research director.

There was no need to simultaneously reveal the $1.8 billion loss, they added, saying the announcements should have been spaced out by a week or two to manage the response. The one-two punch “understandably sparked widespread hysteria amidst a rush to pull deposits.”

Silicon Valley Bank’s?collapse last week sent tingles of panic down investors’ spines as it highlighted a larger problem across the banking sector: The widening gap between the value large lenders place on the bonds they hold and what they’re actually worth on the market.

SVB’s downfall?was tied, in part, to the plunge in the value of bonds it acquired during boom times, when it had a lot of customer deposits coming in and needed somewhere to park the cash.

But SVB isn’t the only institution with that issue. US banks were sitting on $620 billion in unrealized losses (assets that have decreased in price but haven’t been sold yet) at the end of 2022,?according to the FDIC.

What’s happening:?Back when interest rates were near zero, US banks scooped up lots of Treasuries and bonds. Now, as the Federal Reserve hikes rates to fight inflation, those bonds have declined in value.

When interest rates rise, newly issued bonds start paying higher rates to investors, which makes the older bonds with lower rates less attractive and less valuable.

The result is that most banks have some amount of unrealized losses on their books.

“The current interest rate environment has had dramatic effects on the profitability and risk profile of banks’ funding and investment strategies,” said FDIC Chairman Martin Gruenberg in prepared remarks at the Institute of International Bankers last week. “Unrealized losses weaken a bank’s future ability to meet unexpected liquidity needs.”

In other words, banks might find they have less cash on hand than they thought — especially when they need it — because their securities are worth less than they expected.

Still, there’s no need to panic yet, say analysts.

“[Falling bond prices are] only really a problem in a situation where your balance sheet is sinking quite quickly… [and you] have to sell assets that you wouldn’t ordinarily have to sell,” said Luc Plouvier, senior portfolio manager at Van Lanschot Kempen, a Dutch wealth management firm.

Most large US banks are in good financial condition and won’t find themselves in a situation where they’re forced to realize bond losses, said Gruenberg.

Shares of larger banks stabilized Friday after plunging to their worst day in nearly three years on Thursday.

CNN’s Julia Horowitz and Anna Coobin contributed to this post.

US Treasury Secretary Janet Yellen speaks in Washington, DC, on February 14.

US Treasury Secretary Janet Yellen said earlier Sunday that the government wouldn’t bail out Silicon Valley Bank.

Yellen said she’d been hearing from depositors all weekend, many of whom are “small businesses” and employ thousands of people. “I’ve been working all weekend with our banking regulators to design appropriate policies to address this situation.”

A number of lawmakers are speaking out against the idea of a bailout.

CNN’s David Goldman, Andrew Millman, Aileen Graef, Allison Morrow, Matt Egan, Manu Raju, Aaron Pellish and Jack Forrest contributed to this report.

Intervention by the US authorities to stem the fallout from Silicon Valley Bank’s collapse has done little to calm investors across the pond.

Stocks sank despite an announcement by HSBC?(FTRXX)?Monday that it had bought?the UK arm of SVB?for ￡1 ($1.2), saying the business’s customers could “continue to bank as usual” and that their deposits were safe.

Europe: Stocks ticked down in early morning trade as a selloff in bank stocks, which began Thursday, continued apace.

Asia: Asia-Pacific stocks were mixed as investors digested news of the US regulatory efforts.

Pedestrians walk past the New York Stock Exchange in New York on January 3.

US stock futures were holding steady Monday after an extraordinary move by US financial regulators to?restore confidence?in the country’s banking system.

On Sunday, the Biden administration promised that customers of the failed Silicon Valley Bank (SVB) and Signature Bank would have access to all their money starting Monday. The US Federal Reserve will also make additional funding available for eligible financial institutions to prevent runs on similar banks in the future.

Investors around the world visibly exhaled after the announcement, according to Stephen Innes, managing partner of SPI Asset Management, who likened it to “the calvary” coming to the rescue.

The?failure of Silicon Valley Bank?is rattling markets and raising uncomfortable questions: Will it undermine the broader banking system and start a new meltdown?

Most analysts say the implosion of SVB appears company-specific for now. A crucial lender to US technology startups, the bank came under pressure as Silicon Valley funding dried up, the result of an economic slowdown and rapidly rising interest rates.

After Treasury Secretary Janet Yellen convened an unscheduled meeting of financial regulators to discuss SVB’s collapse, Deputy Treasury Secretary Wally Adeyemo on Friday sought to reassure the public about the health of the banking system after the sudden collapse of SVB.

There’s also less anxiety about the stability of the banking sector due to the significant regulatory reforms put in place after the crisis in 2008.

Mike Mayo, senior bank analyst at Wells Fargo, said the crisis at SVB might be “an idiosyncratic situation.”

Still, SVB’s collapse reveals stresses created by the fastest jump in borrowing costs in decades. Central banks have raised interest rates to tame high inflation, but the pace of the increases has thrown up unexpected problems. And worries persist about further unintended consequences.

CNN’s Allison Morrow, Nicole Goodkind and Matt Egan contributed to this post.

The Silicon Valley Bank headquarters in Santa Clara, California, on March 9.

The US Federal Deposit Insurance Corporation offered?Silicon Valley Bank?employees 45 days of employment and 1.5 times their salary, reports say.

An FDIC official did not comment on the details to CNN, but said it is standard practice and one of the first steps the independent government agency takes after being named receiver.

US workers also received their annual bonuses on Friday, just hours before FDIC took over the collapsed lender,?Axios reported.

SVB collapsed Friday morning — a?stunning 48 hours?where a bank run and a capital crisis led to the second-largest failure of a financial institution in US history. California regulators shuttered the tech lender and put it under the control of the FDIC.

The FDIC is acting as a receiver, which typically means it will liquidate the bank’s assets to pay back its customers, including depositors and creditors.

Employees, except essential and branch workers, were told to keep working remotely, Reuters reported. The bank had more than 8,500 employees at the end of 2022.

The FDIC said the main office and all 17 branches of SVB, located in California and Massachusetts,?will reopen Monday.

The FDIC, an independent government agency that insures bank deposits and oversees financial institutions, said all insured depositors will have full access to their insured deposits by no later than Monday morning. It said it would pay uninsured depositors an “advance dividend within the next week.”

The FDIC took over in the midmorning Friday; usually, it waits until markets close.

CNN’s Allison Morrow contributed to this story.

US President Joe Biden?said Sunday that at his direction US Treasury Secretary Janet Yellen and his top economic adviser Lael Brainard worked with financial regulators to ensure households and businesses affected by the Silicon Valley Bank and Signature Bank failures?could access their deposits, and he promised to hold those responsible accountable.

The administration decided to move forward with dramatic emergency actions Sunday to extend a federal backstop to all of Silicon Valley Bank’s deposits in order to ensure access to all of those funds on Monday, according to a senior Treasury official.

The emergency action was paired with the announcement of a new Federal Reserve lending facility and put together over a weekend of furious behind-the-scenes efforts inside the US government to address the acute concern over the fate of the small businesses and individuals at risk of being unable to access their funds.

Earlier, the FDIC said it would pay customers their insured deposits on Monday, which only covers up to $250,000. But the Treasury official noted that “things moved very quickly” over the weekend and that the decision was made to “move early” and trigger the systemic risk exception – a designation that provides more leeway to immediately advance funds to those holding deposits above the current $250,000 threshold covered by FDIC.

Yellen on Sunday instructed the Federal Deposit Insurance Corporation to guarantee SVB customers will have access to all of their money starting Monday – an attempt to ensure public confidence in America’s banking system, Yellen, Federal Reserve Chair Jerome Powell and FDIC Chairman Martin J. Gruenberg said in a joint statement.

Yellen said earlier Sunday the government wouldn’t bail out the bank, with a number of lawmakers speaking out against such an idea.

“Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out, and we’re certainly not looking,” Yellen told CBS News when asked if there will be a bailout. “And the reforms that have been put in place means that we’re not going to do that again.”

Yellen said she’d been hearing from depositors all weekend, many of whom are “small businesses” and employ thousands of people. “I’ve been working all weekend with our banking regulators to design appropriate policies to address this situation,” the Treasury secretary said, declining to provide further details.

CNN’s David Goldman, Andrew Millman, Aileen Graef, Allison Morrow, Matt Egan, Manu Raju, Aaron Pellish and Jack Forrest contributed to this report.

The collapse of Silicon Valley Bank (SVB), which courted Chinese start-ups, has caused widespread concern in China, where a string of founders and companies rushed to appease investors by saying their exposure was insignificant or nonexistent.

SVB, which worked with nearly half of all venture-backed tech and healthcare companies in the United States before it was taken over by the government, has a Chinese joint venture, which was set up in 2012 and targeted the country’s tech elite.

The SPD Silicon Valley Bank, which was 50-50 owned by SVB and local partner Shanghai Pudong Development Bank, said Saturday that its operations were “sound.”

It’s unclear what will happen to SVB’s ownership of the joint venture.

SVB Financial Group, the parent company of SVB, also has two business consulting firms and one financial service firm in mainland China, according to the corporate database Tianyancha.

Concerns about the failure of SVB have spread?around the world, as investors fretted about the broader risks to the global banking sector and any potential spillover effect.

Not significant exposure

In China, at least a dozen firms have issued statements since SVB collapsed trying to pacify investors or clients, saying that their exposure to the lender was limited. Most were biotech companies.

BeiGene, one of China’s largest cancer-focused drug companies, said Monday it had more than $175 million uninsured cash deposits at SVB, which represents approximately 3.9% of its cash, cash equivalents and short-term investments.

Other companies that publicly assured investors included Zai Lab, Andon Health, Sirnaomics, Everest Medicines, Broncus Medical, Jacobio Pharmaceuticals, Brii Biosciences, CStone Pharmaceuticals, Genor Biopharma and CANbridge Pharmaceuticals.

Mobile ad tech firm Mobvista and wealth management firm Noah Holdings said their cash holdings at SVB were “minimal” or “immaterial.”

Popular selfie app Meitu said it hadn’t held any bank accounts at SVB since 2020. It issued a statement “to avoid any potential public misunderstanding.”

A sign for Silicon Valley Bank headquarters is seen in Santa Clara, California, on March 10.

Slicon Valley Bank was one of America’s 20 largest commercial banks and is now under the control of the US Federal Deposit Insurance Corporation after it became unable to pay back customers who withdrew their deposits. Though experts quelled fears of a wider contagion, the bank’s collapse could have significant ramifications on the startup and tech sectors.

Here are the key things to know:

The FDIC acted unusually quickly

The FDIC, an independent government agency that insures bank deposits and oversees financial institutions, took over in the midmorning Friday; usually it waits until markets close. The FDIC is acting as a receiver, which typically means it will liquidate the bank’s assets to pay back its customers, including depositors and creditors.

It said all insured depositors will have full access to their insured deposits by no later than Monday morning. It said it would pay uninsured depositors an “advance dividend within the next week.”

High interest rates led to its demise

The Fed has been aggressively raising interest rates since 2022 to combat rampant inflation. But that made borrowing for businesses and individuals more expensive. High rates significantly constrained tech companies, which undercut the value of tech stocks and made it difficult to raise funds.

Faced with higher interest rates, loss of IPOs and a funding drought, SVB’s clients began pulling money out of the bank.

There’s a lot to lose

US customers held at least $151.5 billion in uninsured deposits by the end of 2022, SVB’s latest annual report said. Foreign deposits reached at least $13.9 billion and are also uninsured.

Companies may have gotten a decent amount out during the bank run, but there is still a lot of money at stake if a buyer or bailout isn’t reached.

Roku held approximately?$487 million of its $1.9 billion in cash?at Silicon Valley Bank, 26% of the company’s total. The streaming company added most of the deposits were uninsured. Video game site Roblox and bankrupt cryptocurrency lender BlockFi are also facing the fallout.

This is not a bank crisis yet

Most analysts say the implosion of SVB appears company-specific for now.

“The reason [SVB is] in trouble is because they have exposure to particular industries,” said Jonas Goltermann, deputy chief markets economist at Capital Economics. Most other banks, he added, are more “diversified.”

There’s also less anxiety about the stability of the banking sector due to the significant regulatory reforms put in place after the crisis in 2008.

Everyday consumers, on the whole, are unlikely to be affected. But the collapse is a good reminder to be aware of where your money is held, and not to have it all in one place.

“The first bank failure since 2020 is a wake-up call for people to always make sure their money is at an FDIC-insured bank and within FDIC limits and following the FDIC’s rules,” Matthew Goldberg, a Bankrate analyst said.

Tech companies are scrambling

SVB was a top lender for the startup community,?whose founders now worry about getting their money out, making payroll and covering operating expenses.

“Now that the bank has folded, I just want to know what happens next,” Ashley Tyrner, founder of health food delivery company FarmboxRx, told CNN in an e-mail. “The FDIC covers 250K, but am I going to recover my whole 8 figures?”

Some are getting creative. Children’s toy, apparel and experience retailer CAMP urged customers to use the code BANKRUN to save 40% off all merchandise (or pay full price – which it said would be appreciated).

Other lenders are feeling the pain

Lenders somewhat similar to SVB are in an unfortunate situation.

Crypto-focused lender Silvergate said it is winding down operations and will liquidate the bank after being financially pummeled by turmoil in digital assets.

CNN’s Matt Egan contributed to this report.

The US and UK governments spent the weekend scrambling to prevent Friday’s dramatic collapse of Silicon Valley Bank – the second biggest in US history – from setting off a new banking crisis.

In an extraordinary action to restore confidence in the banking system, the Biden administration said Sunday all deposits at SVB would be guaranteed. The government also shut down Signature Bank and said its depositors would be protected by a similar deal.

By guaranteeing deposits, the US government is trying to avoid two potentially risky scenarios, both of which could have dire consequences: Other banks with similar profiles to SVB and Signature could be next to fail if customers lose faith that they will have ample cash to fund their deposits. And the tech companies that kept their cash with SVB could collapse if they were unable to make payroll or fund their operations.

In the United Kingdom, similarly feverish efforts over the weekend paid off when banking giant HSBC stepped in just before markets opened Monday to buy SVB UK, protecting the deposits for thousands of British startups.

US futures and global markets got an immediate lift from news of the move to protect SVB’s depositors, but that relief rally is fading early Monday on concerns that other banks that may need to shore up their finances. Banking stocks in Asia and Europe are under pressure Monday.

Some background: SVB ran into trouble when it sold US Treasury bonds at a loss to raise cash to cover deposit withdrawals. Like many banks, it bought bonds in recent years when interest rates were very low. Now that interest rates have shot up, those bonds are worth less. According to the Federal Deposit Insurance Corporation, such unrealized losses total $620 billion at American banks.

A Brinks armored truck sits parked in front of the shuttered Silicon Valley Bank?headquarters on March 10 in Santa Clara, California.

Silicon Valley Bank, the go-to bank for US tech startups, facing a sudden bank run and capital crisis,?collapsed Friday morning, leaving its high-powered customers and investors in limbo.?It was taken over by federal regulators.

It was the largest failure of a US bank since Washington Mutual in 2008. Here’s what we know about the bank’s downfall.

What is SVB?

Founded in 1983, SVB specialized in banking for tech startups. It provided financing for almost half of US venture-backed technology and health care companies. While relatively unknown outside of Silicon Valley, SVB was among the top 20 American commercial banks, with $209 billion in total assets at the end of last year, according to the FDIC.

Why did it fail?

The Federal Reserve began aggressively raising interest rates a year ago to tame inflation. Higher borrowing costs sapped the momentum of tech stocks that had benefited SVB and eroded the value of long-term bonds that SVB and other banks gobbled up during the era of ultra-low, near-zero interest rates.

SVB’s $21 billion bond portfolio was?yielding an average of 1.79%?— the current 10-year Treasury yield is about 3.9%.

At the same time, venture capital began drying up, forcing startups to draw down funds held by SVB. So the bank was sitting on a mountain of unrealized losses in bonds just as the pace of customer withdrawals was escalating.

Then there was panic

On Wednesday, SVB announced it had sold a bunch of securities at a loss, and that it would also sell $2.25 billion in new shares to shore up its balance sheet. That triggered a panic among key venture capital firms, who?reportedly advised companies?to withdraw their money from the bank.

The bank’s stock began plummeting Thursday morning and by the afternoon it was dragging other bank shares down with it as investors began to fear a repeat of the 2007-2008 financial crisis.

By Friday morning, trading in SVB shares was halted and it had abandoned efforts to quickly raise capital or find a buyer. California regulators intervened, shutting the bank down and placing it in receivership under the Federal Deposit Insurance Corporation.

HSBC has scooped up the UK arm of failed Silicon Valley Bank, securing the future of thousands of British tech firms that hold money at the lender.

Had a buyer not been found, SVB UK would have been?placed into insolvency by the Bank of England following the stunning?collapse?of its parent in the United States.

In a statement, the central bank said it “can confirm that all depositors’ money with SVB UK is safe and secure as a result of this transaction.”

HSBC, Europe’s biggest bank, announced the ￡1 ($1.2) deal early Monday morning, saying it would be effective “immediately.”

The acquisition should “end the nightmare thousands of tech firms had been experiencing over the past few days,” Susannah Streeter, head of money and markets at investing platform Hargreaves Lansdown, said in a statement.

SVB UK is a major bank partner for Britain’s tech sector, and the failure of its parent sent tech executives scrambling to work out how to get their cash out to pay staff and cover operating expenses.

Read more here.