A sign hangs at Silicon Valley Bank's headquarters in Santa Clara, California. Noah Berger/AFP—Getty Images
Looking back a year ago, the U.S. financial sector felt like it was on the brink of meltdown. A series of prominent banks, led by Silicon Valley Bank (SVB), suffered from a dry-up of deposits, and top government officials scrambled to prevent widespread infection. Fortunately, the decision to eliminate the federal deposit insurance cap calmed the market and things returned to normal. In a sense.
as financial times The report found that there was nothing to replace Silicon Valley Bank, which in some ways behaved less like a bank and more like a venture capital firm or a tech start-up providing services. While many other banks are trying to claim SVB's tech-friendly mantle, they tend to be more risk-averse and bureaucratic than the banks that have been banking the biggest startups for generations. found.
The day-to-day banking landscape in the venture capital ecosystem is more competitive than it was before the SVB collapse. However, the core of the bank's role is its high-risk orientation of underwriting loans to unprofitable or loss-making startups based on the strength of venture capital backers and their potential to continue investing. Met.
Despite a flood of new options, emerging technology companies are in some cases struggling to gain access to the same capital that has supported the booming venture market for two decades. . There is nothing more appealing than SVB, which is the cornerstone of a “one-stop shop” for the venture community.
Meanwhile, none of the companies competing for SVB's customer base, including First Citizens and HSBC, are attempting to replicate their predecessors' policies of requiring customers to: all Bank transactions with them. This suggests that, for better or worse, a bank run by and for Silicon Valley is unlikely to emerge.
When it comes to crypto companies, remember how Sen. Elizabeth Warren (D-Mass.) and others were trying to make their companies scapegoats for the broader banking meltdown—even if banks were to blame. This is despite the fact that the company's management team was swamped by illegal acts. Soaring interest rates. It was also ironic considering that crypto companies, especially Circle, were harmed along with other companies by SVB's poor business decisions. In any case, the cryptocurrency industry has found a new, more modest banking partner based in the Pennsylvania hinterland.
If we are looking for lessons from the failures of Silicon Valley banks, wall street journal An excellent retrospective that challenges some of the conventional wisdom about crises. This is because last year's bank runs (which also bankrupted major companies such as Signature and First Republic) occurred because online banking allowed customers to withdraw their deposits at unprecedented speed. It is believed that this is a contributing factor. In fact, it turns out that electronic drawers are nothing new at all, and it wasn't tech-savvy startups that led the installation, but the “big players” who headed for the exits first.
lastly, journal He noted that new rules to prevent a repeat of the crisis are still in the works, and one of the challenges lies in identifying “high-quality deposits” for banks. The paper also suggests that funds from crypto companies and companies with venture capital ties may not meet that standard, reflecting tensions between crypto and traditional finance. This is yet another reminder that the issue is far from resolved.
jeff john roberts
jeff.roberts@fortune.com
@jeffjohnroberts
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