This article was originally published here by Clark Hill, and is reposted here with permission. Joann Needleman is a member of the Consumer Relations Consortium's Legal Advisory Board. You can find more information about the Consumer Relations Consortium and the Legal Advisory Board here.

On Friday, March 10, the California Department of Financial Protection and Innovation (DFPI) closed Silicon Valley Bank (SVB), the subsidiary of SVB Financial. The Federal Deposit Insurance Corporation (FDIC) was appointed the receiver of its over $250 billion in assets. This is the largest U.S. bank failure since the global financial crisis more than a decade ago.

SVB was the premier financial institution of choice for startups, fintechs, and their venture-capital/private equity (VC/PE) partners. SVB had over $200 billion in deposits in early 2022. Much of those deposits were in excess of the FDIC-insured limit of $250,000.00. To manage this excess liquidity, SVB Financial invested primarily in long-term U.S. Treasury and government-backed mortgage securities with fixed interest rates. This increased SVB’s securities portfolio threefold.

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