Silicon Valley Bank’s collapse on March 10th has left depositors in a tricky situation.

Leading up to the collapse, Silicon Valley Bank, or SVB, had invested into long-term bonds that were valued close to zero at the time of the original investment. Investing is generally a good idea to reliably make money in the future. However, when interest rates rose, the investment dropped in expected capital due to increasing interest rates. SVB didn’t expect the loss of revenue that investing in the bonds had given them, causing their investment in the U.S. Treasury to plummet. 

On Wednesday, it was announced that SVB had lost 1.8 billion dollars, and needed to make money quickly or their depositors would be left without their money. Quickly, over the course of 24 hours, SVB lost 160 billion dollars as people began withdrawing en masse.

SVB didn’t have enough money for their depositors to withdraw, so the Federal Deposit Insurance Corporation (FDIC) entered the scene in order to stabilize the economy and cover the difference between what the bank had and what it needed by Monday, as it was possible that this could cause a financial epidemic in the United States. Some of America’s largest companies had deposited money in SVB, such as Etsy and Roblox. 

Many politicians were quick to jump on reasons why the bank collapsed. All the evidence points to horrible investing and mismanagement of capital. Florida Governor Ron DeSantis said that, “this bank, they’re so concerned with DEI (Diversity, Equity, and Inclusion) and politics and all kinds of stuff. I think that really diverted them from focusing on their core mission.”

The collapse of SVB may have a ripple on the American economy that could lead to some type of a financial crisis, however, only time will tell.