SVB is the first social media bank run in history. The crisis will change the banking industry forever.

A Brinks armored truck sits parked in front of the shuttered Silicon Valley Bank (SVB) headquarters on March 10, 2023 in Santa Clara, California.

The fall of Silicon Valley Bank was the fastest in history, largely due to Twitter-induced panic.
Many VCs and founders stoked panic on the platform, later deciding to delete their posts.
“Tech is obsoleting the current regulatory structure,” a former regulator said.

There’s a good chance the run on Silicon Valley Bank would not have happened had it not been for social media. 

Bank runs have happened before, but this collapse was a new tech-fueled phenomenon that shocked the banking industry, regulators and most other experts.

Anxiety in the tech community quickly escalated through social media, mainly Twitter. “SVB” was tweeted about roughly 200,000 times on Thursday, with several founders and CEOs of tech companies posting about pulling money from the bank. Tech luminaries, the very people SVB banked for so many years, just couldn’t help themselves.

“OK i am hearing from dozens of founders about what to do at SVB. It’s an all out bank run,” founder Howard Lerman tweeted on Thursday when SVB was trying to raise new capital. 

“The thing about a bank run is that there’s no upside to keeping your money in the at-risk bank,” wrote Xavier Helgesen of Enduring Ventures the same day. 

By Friday, depositors had tried to withdraw $42 billion from SVB. The bank was shut down by regulators and taken over by the FDIC.

Never before has a bank collapsed so fast, according to Tom Vartanian, author of “200 Years of American Financial Panics” who was general counsel of the Federal Home Loan Bank Board during the Savings and Loan crisis of the late 1980s.

“The rapidity of the crisis and social media has taught …read more

Source:: Businessinsider

Leave a Reply

Your email address will not be published.