“Silicon Valley Bank Goes Belly Up. Techies Shocked to Learn That “Disruption” Can Also Mean “Total Collapse.”
FDIC to Investors: “It Could Be Worse, You Could Have Invested in My Cousin’s Lemonade Stand.”
Start-Up founders this week were stunned to learn that Zuckerberg’s famous motto “move fast and break things” applies to banks too. Silicon Valley Bank (SVB) is no more. The bank, once the darling of the tech industry, has gone belly up, leaving investors and tech firms in a lurch.
The Federal Deposit Insurance Corporation (FDIC) seized SVB’s assets after depositors – mostly tech workers and start-up firms – triggered a run on the bank. The collapse of the $209bn bank, the largest since the 2008 recession, has sent shockwaves throughout the tech industry. Looks like all that innovation and disruption didn’t quite work out for SVB.
But don’t worry, U.S Treasury Secretary Janet Yellen said the U.S. banking system is “resilient.” You know, just like the Titanic was unsinkable. And if that doesn’t give you confidence, Treasury is now monitoring “a few” banks amid the SVB fallout. Because nothing says “rock-solid banking system” like having to monitor even more banks after one of the biggest collapses since the 2008 recession. It is with great relief that we know the government is on the case. As we all know, they did such a fantastic job in 2008 that it only took ten years to recover! Bravo!
Many start-ups used SVB as their sole account, which is about as risky as putting all your passwords on a sticky note and sticking it on your computer screen. But hey, when you’re disrupting an industry, who has time for diversification? Let’s also remember the many private investors who used the bank for their personal cash flow and mortgages. Looks like they’ll have to resort to more primitive forms of banking, like burying their money in a coffee can in the backyard.
Investors are only insured up to $250,000, which is like trying to cover a tsunami with an umbrella. But at least they can console themselves with the fact that they’re not the only ones who got screwed over. SVB was the 18th largest bank in the US, which just goes to show you that size really doesn’t matter when it comes to banking. Maybe they should have gone with a more reputable bank, like the Bank of Monopoly.
It’s hard not to feel a bit of schadenfreude towards the tech industry. After all, they’ve been disrupting industries left and right for years. But it turns out that disrupting the banking industry isn’t as easy as disrupting the taxi industry. It seems like someone at the bank misplaced a few billion dollars. Oopsie daisy! but let’s not jump to conclusions here. Maybe the money is just hiding under a cushion somewhere. Or maybe the bank’s accountant accidentally carried the decimal point a few places too far. These things happen, you know. The whole situation is a bit of a farce.
The real victims here are the customers who’ve lost their life savings. As we have a giggle and a chuckle about the ridiculousness of it all, let’s remember the human cost of these financial meltdowns. Let’s hold those who’ve let us down accountable and work towards building a more honest and fair financial system.
In the meantime, I’ll be keeping my money in a jam jar in the kitchen. It might not be the most high-tech solution, but at least I’ll know where it is. Ta-ta for now!
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