what really went wrong at the silicon valley bank? Shed no tears for investors in Silicon Valley Bank (SVB). On March 10th the bank, which had $212bn of assets, failed with spectacular speed, making it the biggest lender to collapse since the global financial crisis of 2007-09. Most of SVBs depositors were Bay Area tech startups with accounts holding well in excess of the $250,000 that is insured by the federal government. They had fled and their panic was rational. By loading up on long-term bonds, SVB had taken an enormous unhedged bet on interest rates staying low. That bet went wrong, leaving the bank insolvent (or near enough). The fact that shareholders have been wiped out and bondholders will take big losses is not a failure of the financial system. A bad business has been allowed to go bust. It is what happened next that reveals the flaws in Americas banking architecture. SVB probably had enough assets for depositors to have got all or almost all of their money backbut only after a long wait. This left many tech firms facing life in a financial deep freeze; Roku, a streaming giant, had nearly $500m tied up in SVB. Across the technology sector, layoffs and bankruptcies loomed. And Americas regulators and the government seemed to fear that depositors were losing faith in other banks, too. On March 12th they judged SVB too big to fail and guaranteed all the banks deposits.

1. How did the secondary market fail SVB?

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2. Could SVB utilize the primary market to save the bank? If yes, why? If no, why not?

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3. How did social media and technology influence the failure of SVB?

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4. How did asymmetric information contribute to the collapse of SVB?

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