Report: Police called to Silicon Valley Bank branch in New York
Police were reportedly called to the Manhattan branch of Silicon Valley Bank on Friday after depositors trying to withdraw funds were blocked at the bank.
The incident was the result of a bank raid on its main branch in Silicon Valley, with customers triggering $42 billion in withdrawals. On Friday, the bank was taken over by the Federal Deposit Insurance Corporation after the California Department of Financial Protection and Innovation (DFPI) declared the bank insolvent.
The run on banks forced depositors in New York to try to withdraw their deposits from the bank’s Manhattan branch, but the bank refused to let depositors into the building, according to the agency. New York Post:
Police responded after a group of “about a dozen founders” traveled to the SVB’s Manhattan office on Park Avenue, journalist Eric Newcomer told Substack. One of the founders was former Lyft chief executive Dor Levy, who provided Newcomer with text updates from the scene.
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The ISF blocked the entrance of Levy and the others gathered into the building. At approximately 9:20 a.m. ET, building employees “called the police” and a pair of NYPD vehicles arrived.
Levy “said the police were very friendly and ordered one person who didn’t want to leave the SVB offices to leave the building,” Newcomer wrote.
Before the collapse, Silicon Valley Bank was one of the largest banks by assets in the US Federal Reserve. According to John Carney of Breitbart News, “SVB plays a central role in San Francisco’s startup economy” and “does business with about half of VC-backed startup firms in the US.”
The bank run was caused by a number of factors. One such factor was that “venture capitalists this week began advising their portfolio companies to ‘diversify’ away from SVB, according to multiple reports.” The second major factor was the Fed’s rate hike due to President Joe Biden’s inflation.
Carney told Fox Busniess host Larry Kudlow, “One of the problems [for SVB] when the money was freely available to all these startups, they didn’t borrow much. So they had a lot of incoming deposits and not so many opportunities to lend to people. I mean, yes, you can borrow money so people can buy a yacht or a fancy mortgage on some billionaire tech start-up luxury mansion, but they really had way too much money. So they invested in bonds. Bank of America, I think, has 25 percent of its assets in bonds, but this bank had over 50 percent of its assets in bonds.”
Subscribe to Wendell Husebø on Twitter @WendellHusebø. He is the author The politics of slave morality.
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