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The Collapse of Silicon Valley Bank: What's New, and What's Not

For as long as there have been banks, there have been bank runs. Yet the run on Silicon Valley Bank was also unique to the digital age. How so?

In short, Silicon Valley Bank was the first social media bank run. As Business Insider notes, “SVB” was tweeted nearly 200,000 times last Thursday as founders and tech executives rushed to withdraw their money, with others rapidly following suit as word spread online. Depositors tried to pull so much money within the next 24 hours that regulators intervened to shut down the bank—the fastest that had ever happened. That doesn't mean there aren't instructive parallels with past bank runs. Comparisons with events like the 1984 failure of Continental Illinois, the 1991 Bank of New England bailout, and even the 2008 subprime mortgage crisis point to overarching lessons—e.g., about the risks of an unstable uninsured depositor base—and help us anticipate how regulators and the sector as a whole may respond. But applied history isn’t just about identifying present-day parallels with past events. It’s also about understanding what is distinctly different about today—in this case, the role of the Internet and social media—and what those differences suggest about root causes, deep trends, and effective responses.

Arielle Gorin is a Saybrook Senior Consultant. She is currently at work on an anniversary campaign for a leading multi-family office. This post originally appeared on Saybrook's LinkedIn page.


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