The news is awash with complex descriptions of what happened to Silicon Valley Bank, the once-prominent bank that provided finance solutions to companies like Chime, Roblox, and thousands of others. Let’s cut through the noise, and boil it down: Here are the three reasons why SVB collapsed.
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Keeping it Real: Don’t Say the “B” Word
Silicon Valley Bank is getting a lifeline from the government, but everyone is insisting it’s not a bailout – even though it basically is.
The government is using a deposit insurance fund to backstop $175 billion in deposits and auctioning off $200 billion in assets held by the bank. There’s also going to be a tax on larger banks to support the rest.
Some experts say this all adds up to a bailout, but the Biden administration is avoiding that word because it doesn’t want to be associated with rescuing “fat cats.” Others say we just need to call a spade a spade – this is a bailout.