Mar 12, 2023
Silicon Valley Bank Collapses in Biggest Bank Failure Since 2008 Transcript
Silicon Valley Bank, the 16th largest bank in the United States, is shut down. With $175 billion in deposits, it is the biggest American bank to fail since the 2008 financial crisis. Read the transcript here.
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Speaker 1 (00:00):
Alarm outside headquarters of Silicon Valley Bank in Santa Clara, California, today.
Dean Nelson (00:05):
They just came out and told us that the bank is shut down.
Speaker 1 (00:07):
SVB, the 16th largest bank in the US, with $175 billion in deposits, is now the biggest American bank to fail since the 2008 financial crisis. Its customers are primarily businesses and investors in the tech sector.
Greg Baer (00:21):
The root cause of the failure here was a sudden and significant increase in interest rates. Which yeah, that part of the job of a bank is to manage interest rate risk, and that didn’t happen here.
Speaker 1 (00:31):
Earlier this week, SVB disclosed it took a loss on the sale of bonds, due to rising interest rates and announced it would sell shares to shore up its balance sheet. Its stock price plunged, and customers rushed to take their money out. The FDIC now stepping in, telling customers they will be able to access funds by Monday. But the guaranteed amount per depositor: $250,000.
Ashley Tyrner (00:55):
A heart-stopping moment of, “This bank is done.”
Speaker 1 (01:00):
Ashley Tyrner is the CEO of healthcare startup FarmboxRx. Unable to access her money today, she fears she could be out more than $10 million.
Ashley Tyrner (01:10):
$250,000 isn’t a ton of money to us, when you’re talking of eight figures that’s in the bank, currently.
Speaker 1 (01:17):
Concern over today’s collapse of SVB drove Wall Street lower. The banking sector alone, down more than 4%. Treasury Secretary Janet Yellen:
Janet Yellen (01:26):
There are recent developments that concern a few banks, that I’m monitoring very carefully.
Speaker 1 (01:34):
The immediate concern? The cash-burning startups, who have millions in SVB, and may not be able to access the money they need to pay bills or make payroll.
Lester Holt (01:44):
Deirdre, given what happened today, how much concern is there about the banking sector overall?
Deirdre Bosa (01:51):
Lester, at this point, the issue seems contained to this one bank. SVB was so heavily focused on these startup tech companies, that its business model put it in a risky position that the major banks don’t face in the same way, Lester.
Lester Holt (02:04):
Deirdre Bosa tonight, thank you. Thanks for watching our YouTube channel. Follow today’s top stories in breaking news, by downloading the NBC News app.