Silicon Valley Bank’s catastrophic collapse has sparked a nationwide frenzy among customers and the need for the Federal Department Insurance Corporation (FDIC) to step in and take over.
The FDIC took over SVB’s operations Friday after the bank experienced massive withdrawals by their clients, making it the second largest U.S. bank meltdown in history, Forbes reported.
The Santa Clara, California–based bank and its parent, SVB Financial Group, placed too much focus on crypto and tech startups as well as bond investments that were sensitive to interest rate hikes. The entire company was exposed and ultimately drained of capital and banking customers, the outlet added.
Bank customers rushed to withdraw their money from the bank, similar to the ones seen during the Great Depression.
Photos continue circulating across media outlets and the internet that show long lines outside SVB branches. People are rushing to try and recoup their money, but it might be too late. Now that the FDIC is involved, a queue has been formed, and there’s a limit on guarantees they can make under federal law.
The FDIC insures up to $250,000 for any given depositor in federally protected banks, with anything over that amount, not a guarantee. Reports indicate much of SVB’s clientele, which typically comes from those in the tech startup world and often has a lot of assets deposited, might have amounts way above the insured amount offered, TMZ reported.
There are also reports of Wells Fargo accounts freezing for customers trying to withdraw and transfer funds. Bank of America is also getting caught up in the financial storm. Both banks are trending on social media, with many Twitter users suggesting people should get their cash out quickly.
