What’s Going on With Silicon Valley Bank?

By Telis Demos

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SVB Financial Group bought some of the safest assets in the world of finance. How could it possibly have failed in two days?

Here are some questions and answers to help explain what happened.

How did we get here?

SVB Financial is the parent company of Silicon Valley Bank, which counts many startups and venture-capital firms as clients. During the pandemic, those clients generated a ton of cash that led to a surge in deposits. SVB ended the first quarter of 2020 with just over $60 billion in total deposits. That skyrocketed to just shy of $200 billion by the end of the first quarter of 2022.

What did the bank do?

SVB Financial bought tens of billions of dollars of seemingly safe assets, primarily longer-term U.S. Treasurys and government-backed mortgage securities. SVB’s securities portfolio rose from about $27 billion in the first quarter of 2020 to around $128 billion by the end of 2021.