Feds shore up Silicon Valley Bank deposits, capping weekend of anxiety for Mass. customers

U.S. Treasury officials on Sunday evening said customers of the failed Silicon Valley Bank would have access to all of their money on Monday, in a bailout that would not be paid for by taxpayers.

The news came at the end of an anxiety-filled weekend for the bank's customers across Greater Boston, who were scrambling to secure cash for payroll and business operations. Many in the financial industry had hoped for a rescue to stave off ripple effects on the economy and the banking system.

Jonathan Levine, co-founder and chief executive of Folia Materials, a Bedford-based startup and paper innovator, is one of thousands of entrepreneurs affected by the run on Silicon Valley Bank that led to a federal takeover on Friday.

“All of our money is right now locked up in Silicon Valley Bank,” Levine said in an interview Sunday. “Right now we have a few thousand dollars.”

Like many people, Levine learned about the tech-focused bank’s brisk demise when he saw a slew of headlines. The Santa Clara, California-based institution, with several offices in the Boston area, had a four-decade history of catering to startups and technology clients, and had grown to $209 billion in assets. It’s now the biggest bank failure since the 2008 financial crisis.

Federal regulators are seeking buyers for Silicon Valley Bank, and the Federal Deposit Insurance Corp. plans to reopen the bank’s offices Monday. It had previously pledged to provide depositors only with funds up to the federally insured limit of $250,000. But a joint statement from Treasury Secretary Janet Yellen and the heads of the Federal Reserve and FDIC said the regulators had approved a resolution "that fully protects all depositors."

Benjamin Howe, chief executive of AGC Partners in Boston, told clients Sunday that his investment banking firm had managed to withdraw its own funds from Silicon Valley Bank earlier last week. In an interview, he said many companies he works with were not so fortunate and were worried about making payroll.

“They're the go-to bank for all the startups,” Howe said. “They've always been the biggest presence as a lender for the tech and biotech world and health care. They’re the biggest player in the country.”

Silicon Valley Bank has worked with brand-name venture capitalists from Boston to California, and sometimes also invested in deals alongside the VCs. In many cases, when startups landed venture funding, they deposited the lion’s share of that money in accounts with Silicon Valley Bank. So while employees of startups were fretting in recent days over their future, venture investors were also at risk.

On Sunday, Gov. Healey’s administration said she had spoken with federal regulators and the White House about the bank’s collapse. Staff had worked over the weekend to grasp the full impact on Massachusetts and its economy, especially in tech and life sciences. But Healey said she has confidence in the state’s regional banks.

“Our administration is actively working to support individuals and businesses affected by SVB’s closure and to find solutions to help them address immediate needs, including putting supports in place to ensure that small businesses and employees do not experience significant disruptions,” Healey said in a statement.


Cornelius Hurley, a former Federal Reserve Bank regulator who teaches financial services law at Boston University School of Law, said he's worried about the potential fallout for other banks, and about how tech companies will cope.

“There are a lot of companies in suspended animation right now because of this,” he said. “If you have deposits in the bank, as most do, over $250,000, you’ve got to be thinking now – what is the viability of that bank's balance sheet?”

Hurley said regulators should have seen the trouble coming at Silicon Valley Bank, and at a smaller institution that failed earlier last week in California, Silvergate Capital Corp. In both cases, he said, the Federal Home Loan Bank of San Francisco had extended unusual funding to the institutions as they were facing trouble.

In a statement on its website, the Federal Home Loan Bank said, the “Silicon Valley Bank event is unfortunate but does not impact the financial strength and stability FHLBank San Francisco provides to our members, and as such, the greater financial industry.”

Another California institution, First Republic Bank, which has offices in Boston, saw its stock hit hard last week as investors worried it could face similar challenges to Silicon Valley Bank. In a filing with bank regulators, First Republic sought to assure customers of its “continued safety and stability and strong capital and liquidity positions.”

As part of its Sunday announcement, the Treasury also said all the depositors of a New York institution, Signature Bank, also would be made whole. Signature was closed on Sunday by its state regulator.

The full impact of Silicon Valley Bank’s collapse is not yet known. But beyond the high-tech arena, Silicon Valley’s 2021 acquisition of Boston Private Bank & Trust Co. brought in a whole new roster of clients, from nonprofits and charter schools to wealthy families. Those customers, too, were affected by the feds’ seizure of Silicon Valley Bank.

Many people were hoping regulators will find a buyer for the bank. Although it’s not yet certain what the details of that would look like, a Wall Street firm or large bank could bring stability and continuation of service to thousands of customers across the country.

In the meantime, a broad swath of customers was sweating it out before the feds' announcement. For instance, Circle, a Boston-based cryptocurrency firm, had $3.3 billion of reserves with Silicon Valley Bank. And there are smaller players like Scroobious, which helps startups raise money. The company’s chief executive, Allison Byers, said the impact of the bank’s failure was enormous.

“It’s a very sad and it's a very scary time,” she said. “Myself, our community and the startup community at large is going to be feeling this financially and also emotionally for quite a long time.”

Headshot of Beth Healy

Beth Healy Deputy Managing Editor
Beth Healy is deputy managing editor at WBUR.


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Walter Wuthmann State Politics Reporter
Walter Wuthmann is a state politics reporter for WBUR.



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