The Federal Deposit Insurance Corporation said insured deposits would be available on Monday morning. The Federal government insures deposits to $250,000, but anything above that level is considered uninsured. The most immediate problem is Silicon Valley Bank’s large deposits. There are two large problems remaining with Silicon Valley Bank, but both could lead to further issues if not resolved quickly. Bank regulators had no other choice but to seize Silicon Valley Bank’s assets to protect the assets and deposits still remaining at the bank. The fancy tech-focused bank was brought down by the oldest issue in banking: a good ol’ run on the bank. The bank tried to raise additional capital through outside investors, but was unable to find them. That required selling typically safe bonds at a loss, and those losses added up to the point that Silicon Valley Bank became effectively insolvent. Because Silicon Valley customers were largely businesses and the wealthy, they likely were more fearful of a bank failure since their deposits were over $250,000, which is the government-imposed limit on deposit insurance. Initially that wasn’t a huge issue, but the withdrawals started requiring the bank to start selling its own assets to meet customer withdrawal requests. So Silicon Valley customers started withdrawing their deposits.
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