Police were reportedly called to Silicon Valley Bank’s Manhattan branch on Friday after depositors attempting to withdraw funds were locked out of the bank.
The incident was the result of a bank run on its main branch in Silicon Valley with customers initiating withdrawals of $42 billion. On Friday, the bank was placed into receivership by Federal Deposit Insurance Corp. after the California Department of Financial Protection and Innovation (DFPI) found the bank insolvent.
The bank run caused depositors in New York City to try to withdraw their deposits form the bank’s Manhattan branch, but the bank refused to allow the depositors inside the building, according to the New York Post:
Police responded after a group of “about a dozen founders” went to SVB’s Manhattan location on Park Avenue, journalist Eric Newcomer said in a Substack post. One of the founders was former Lyft executive Dor Levi, who provided Newcomer with text updates from the scene.
…
SVB blocked Levi and others who gathered from entering the building. By around 9:20 a.m. ET, building officials “called the police” and a pair of NYPD vehicles had arrived.
Levi “said the police were very friendly and instructed one person who didn’t want to leave SVB’s offices that they had to exit the building,” Newcomer wrote.
Before collapsing, Silicon Valley Bank was one of the largest banks by assets in the U.S. Federal Reserve. According to Breitbart News’s John Carney, “SVB plays a central role in the start-up economy of San Francisco” and “does business with about half of venture capital backed start-up firms in the U.S.”
The bank run was caused by a number of factors. One of those factors was “venture capitalists this week began advising their portfolio companies to ‘diversify’ away from SVB, according to multiple reports.” A second underlying factor was the FED’s interest rate hikes due to President Joe Biden’s inflation.
Carney told Fox Busniess host Larry Kudlow, “One of the problems [for SVB] was when money was so freely available to all these start-ups, they didn’t borrow a lot. So, they had a ton of deposits coming in and not a lot of opportunity to make loans out to people. I mean, yeah, you can lend money so people can buy a yacht or a fancy mortgage on some tech start-up billionaire’s fancy mansion, but they really had way too much money. So, they invested it in bonds. Bank of America I think has 25 percent of its assets in bonds, but this bank had over 50 percent of its assets in bonds.”
Follow Wendell Husebø on Twitter @WendellHusebø. He is the author of Politics of Slave Morality.
Comments are closed.