Silicon Valley Bank collapsed over the weekend, the result of a rare combination of unpredictable factors.
The bank started in the 80s to focus on the needs of startups. But it grew a lot in recent years and was the 16th biggest bank in the U.S. before it collapsed.
This seemed safe until inflation hit the economy. To combat inflation, the U.S. central bank raised its benchmark interest rate by 4.5 percentage points in a year. Troubles continued until SVB tried to address the issue by raising capital through a stock sale run by Goldman Sachs last week. But SVB depositors caught wind of the bank’s predicament and rushed to take their money out.
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