Police were reportedly called to the Manhattan branch of Silicon Valley Bank on Friday after depositors who tried to withdraw money from the bank were locked out.
The incident was the result of a bank running its main branch in Silicon Valley where customers began withdrawing $42 billion. On Friday, the bank was placed into receivership by Federal Deposit Insurance Corp. After the California Department of Financial Protection and Innovation (DFPI) found the bank insolvent.
The bank’s flight caused depositors in New York City to try to withdraw their deposits from the bank’s Manhattan branch, but the bank refused to allow depositors into the building, according to The Guardian. New York Post:
Police responded after a group of “about a dozen founders” drove to Manhattan’s SVB location on Park Avenue, journalist Eric Newcomer said. In another Substack. Among the founders was former Lyft CEO Dor Levi, who gave the newcomer text updates from the scene.
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The SVB prevented Levy and the others who had gathered from entering the building. At about 9:20 a.m. ET, building officials “called the police” and a pair of NYPD cars arrived.
“He said the police were very friendly and told one person who didn’t want to leave the SVB offices that they had to get out of the building,” Levy wrote.
Before the crash, Silicon Valley Bank was one of the largest banks by assets in the US Federal Reserve. According to John Carney of Breitbart News, “SVBs play a major role in San Francisco’s startup economy” and “do business with about half of the venture capital-backed startups in the US”
The bank’s run was caused by a number of factors. One such factor was “this week venture capitalists began advising their portfolio companies to ‘diversify’ away from SVB, according to multiple reports.” The second underlying factor was higher interest rates at the Federal Reserve due to President Joe Biden’s hyperinflation.
“One of the problems,” Carney told Fox Business host Larry Kudlow [for SVB] When money was freely available to all these startups, they didn’t borrow much. Therefore, they had a lot of deposits coming in and didn’t have a lot of opportunity to give people loans. I mean, yeah, you could lend money so people could buy a yacht or a luxury mortgage on a fancy mansion for a tech billionaire upstart, but they already had a lot of money. So, they invested it in bonds. I think Bank of America has 25 percent of its assets in bonds, but this bank had over 50 percent of its assets in bonds.
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