The biggest bank collapse since the 2008 financial crisis. And it shut down today. It's called the Silicon Valley Bank, and it is one of the tech industry's largest lenders also lend to individuals across the country. It is now under control of the federal government.
It was a sudden implosion and it came after a run on deposits. So the bank stock lost 80% of its value this week. 60% in one day alone. Yesterday, this morning, shares halted. It was over quickly. And then police showed up at the bank headquarters.
In California today. You're looking at that here Customers reportedly even lined up at a bank branch on Park Avenue in New York City. The NYPD showed up there. Those customers demanding their deposits back. Now to be clear,.
Silicon Valley Bank is a huge bank and its customers include individuals as well as household names, you may know, like Airbnb, Pinterest, Cisco. And this is a way bigger story. The entire banking industry is feeling the impact. US banks at one.
Point had lost over $100 billion in stock market value in just two days. And there are fears now that this could spread beyond banking to other parts of the economy. This is like the SNL crisis in the eighties. We're not talking.
About a failure of this bank, but the banks could, you know, fail. Not all of this is clearly an example of something breaking. We can assume that there are serious contagion here. Okay. So when you use the word contagion, it begs the question,.
Why could this happen at other banks? Well, for one basic reason, Silicon Valley Bank was doing what a lot of other banks are doing right now slip to customer deposits. And they went and invested that money in other things like U.S. government debt and mortgages.
And they've been doing that for quite a while. Well, when the Fed started to hike rates aggressively, that meant that Silicon Valley bank immediately lost money on those investments at the very same time.
As they were losing money as interest rates rose. Those bank customers, those depositors, they needed to withdraw more money. So they started to sell assets, losing money just to raise the money, needed to make good on deposit withdrawal requests.
And then that turned into a spiral of fear and a race among customers to withdraw assets. The run on the bank. And yesterday afternoon, the CEO of Silicon Valley Bank, his name is Greg Becker, hosted a call with clients and said, quote,.
My ask is to stay calm because that's what's important. We have been long term supporters of you. The last thing we need you to do is panic. Well, when that's the ask as a bank, you're toast. And one person familiar with the situation.
Asking me the hypothetical question tonight what prevents runs on a whole bunch more banks next week? Unclear. It is an important moment. And tonight, the deputy treasury secretary, Wally Adeyemo, is trying to calm fears.
In an exclusive interview with CNN, federal regulators are paying attention to this particular financial institution and that when we think about the broader financial system, we're very confident in the ability and the resilience of the system.
Alison Greenberg is OUTFRONT. She is the CEO of Ruth Health. It's a maternity care startup that has money deposited in Silicon Valley Bank. So, Alison, thank you very much for being with me. So you are right in the middle of this. Let's just start with.
When you realized you a startup, you've got money at this bank. You're using that money to make payroll and other things. When did you find out something was wrong? So my co-founder, Audrey Wu, and I received an email from one of our seed investors.
The email seemed cryptic. It was strange. It was urgent. It was not like the other email he sends And we were in meetings. You know, we run a busy maternal health startup. We have so many concerns every day that this email just didn't make sense. So a few hours later,.
I called the investor and I said, Hey, what was this email about? He was out of breath, like he had just run a marathon. And he said, Take your money out of SBB, go into your account, take your money out as soon as possible. And, you know, as a business owner, my co-founder,.
Adrian I constantly think about two things. We think about our team, the people we employ and their families. And we think about our patients, the mothers, the new moms and the families that we support and their families. And so for us, it was do this now.
Or else. Okay. And this was what, yesterday or the day before? This was yesterday between the hours of noon and 3 p.m.. Yesterday between the hours of noon and 3 p.m. you get this. So then you do it. You go and you.
And how does that happen? They actually give you the money I mean, these are the 3 hours before the world fell apart. So what happened then? Well, we were incredibly lucky to have that news early from an investor. We didn't withdraw the money immediately.
You know, we're conscientious business owners. We spoke to a few other investors. We spoke to friends. I mean, this is like calls going off the hook for the last 36 hours. When we felt confident that this was going to be a crisis.
Audrey acted fast. And this is the kind of fear that actually incites focus. We withdrew the money through transfers and wires as soon as possible. I mean, she was withdrawing small amounts, big amounts.
Just to not set off an eye that might limit our withdrawals. And we were able to remove this was not our only bank account, but we were able to remove the majority of the funds so that what was left when the website crashed was below the $250,000.
Right. So you have money there. And I know the FDIC in terms of because the amount I mean, obviously had a lot more than that there. You were able to get that out. The amount that you have that's insured now by the FDIC, the 250,000.
Your understanding is you're going to get that pretty much right away. What we're hearing is by Monday. Okay. So that that I think that should give people calm. The FDIC if you're under the limit it gives you.
Is a holding is holding strong on this. So Barron's is reporting that the CEO Greg Becker I just mentioned him I know you weren't on that call, but he had that call that he sold nearly $3.6 million in stock less than two weeks ago. That's obviously worth zero tonight.
I know you don't necessarily know the circumstances of that. And I'm not trying to say it was nefarious I'm just saying. What's your reaction when you hear that? Erin, my reaction is that this is so much bigger than a bank. I run a nationwide telehealth company. We serve,.
You know, prenatal and postpartum patients. I have friends in health care, tech and financial tech and property tech, all of us see the impact on human life. And so for us, you know, call with the CEO of the bank is not our first priority.
Our first priority is securing those funds. And making sure we can meet payroll on the 15th. So, you know, the human impact of this, I think, is something I cannot underscore enough. And, you know, my heart goes out to.
So many business owners, not just startups, but small business, agriculture, all the kinds of companies that bank with us where their founders and owners are struggling right now, trying to make ends meet, trying to make sense of you fear.
And what you see is, I mean, we're not even talking about other banks. We're talking about ASB itself, but that the impacts of this are significant I mean, they will affect everyday Americans. They will not just affect CDOs like me.
We have team members in Arkansas, North Carolina, Washington State, Minnesota, those people would be affected, too, had we not gotten those funds out in time.
3 thoughts on “CEO describes pulling money from financial institution hours sooner than give procedure”
That’s the president you voted for pause complaining now
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