How social media brought down Silicon Valley Bank | Opinion
Bob, who did not want to provide a last name speaks with press after exiting Silicon Valley Bank's headquarters in Santa Clara, Calif., on Monday, March 13, 2023. The federal government intervened Sunday to secure funds for depositors to withdraw from Silicon Valley Bank after the bank's collapse. Bob said that he has been a customer of SVB for 25 years and came to the bank to withdraw his money.
While this bank failure is different, it’s not necessarily less problematic than previous bank failures. The federal government wisely moved quickly over the weekend to reassure depositors and avert spreading uncertainty to the rest of the banking sector. It is too early to know for sure whether actions over the weekend have adequately reassured financial markets or whether this failure, the biggest banking collapse since the global financial crisis in 2008, is the canary in the coal mine for a broader financial earthquake.
Over time, more lessons will emerge from Silicon Valley Bank’s failure than what is evident right now. Social media accelerated fear and uncertainty among the bank’s customers, a reality that bank managers must better understand. The management team at Silicon Valley Bank also broke a cardinal rule by failing to diversify and making the institution extremely vulnerable to a single industry.
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