Long story short, a California bank (Silicon Valley Bank) went public yesterday afternoon saying they no longer have the cash to pay their debts due to startup investments that chewed up all their financial reserves.
Fast forward about 18 hours later (mid-morning today) and the bank was placed in receivership (to the FDIC) after attempting to put itself up for sale.
Trading in the bank’s stock was halted by the stock exchange today at 10:05 a.m. ET, immediately dropping the price from $106 to $0.
The FDIC has issued a press release stating that they have created a new bank in Santa Clara to refund those who had insured deposits at the bank. Those with uninsured deposits will be given a letter of credit to have a chance to get their money back through bankruptcy proceedings; yes good luck with that…
Now we’re starting to hear from other companies how they’ll be affected by the bank’s closure: Roku, Vanguard, BlackRock and several pension funds around the world are notable. If you own shares of any Vanguard ETF or index fund, you’ve been affected
The failure of Silicon Valley Bank has affected the banking sector of the stock market, causing a massive sell-off in most banking stocks worldwide. The Bank of England issued a statement saying they are monitoring the situation
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