The biggest bank collapse
since the 2008 financial crisis.
And it shut down today.
It's called the Silicon Valley Bank,
and it is one of the tech industry's
largest lenders also lend to individuals
across the country.
It is now under control
of the federal government.
It was a sudden implosion
and it came after a run on deposits.
So the bank stock lost
80% of its value this week.
60% in one day alone.
Yesterday, this morning, shares halted.
It was over quickly.
And then police showed up
at the bank headquarters
in California today.
You're looking at that here
Customers reportedly
even lined up at a bank
branch on Park Avenue in New York City.
The NYPD showed up there.
Those customers
demanding their deposits back.
Now to be clear,
Silicon Valley
Bank is a huge bank and its customers
include individuals as well as household
names, you may know, like Airbnb,
Pinterest, Cisco.
And this is a way bigger story.
The entire banking
industry is feeling the impact.
US banks at one
point had lost over
$100 billion in stock market value
in just two days.
And there are fears
now that this could spread beyond banking
to other parts of the economy.
This is like the SNL
crisis in the eighties.
We're not talking
about a failure of this bank,
but the banks could, you know, fail.
Not all of this is clearly an example
of something breaking.
We can assume that there are serious
contagion here.
Okay.
So when you use the word contagion,
it begs the question,
why could this happen at other banks?
Well, for one basic reason,
Silicon Valley Bank was doing
what a lot of other
banks are doing right now
slip to customer deposits.
And they went
and invested that money in other things
like U.S. government debt and mortgages.
And they've been doing that
for quite a while.
Well,
when the Fed started to hike rates
aggressively, that meant that Silicon
Valley bank
immediately lost money
on those investments
at the very same time
as they were losing money
as interest rates rose.
Those bank customers, those depositors,
they needed to withdraw more money.
So they started to sell assets,
losing money
just to raise the money,
needed to make good on deposit
withdrawal requests.
And then that turned
into a spiral of fear
and a race among customers
to withdraw assets. The run on the bank.
And yesterday afternoon,
the CEO of Silicon Valley Bank,
his name is Greg Becker,
hosted a call with clients
and said, quote,
My ask is to stay calm
because that's what's important.
We have been long term supporters of you.
The last thing we need you to do
is panic.
Well, when that's the ask as a bank,
you're toast.
And one person
familiar with the situation
asking me
the hypothetical question tonight
what prevents
runs on a whole bunch
more banks next week? Unclear.
It is an important moment.
And tonight,
the deputy treasury secretary,
Wally Adeyemo, is trying to calm fears.
In an exclusive interview with CNN,
federal
regulators are paying
attention to this
particular financial institution and that
when we think about the broader
financial system,
we're very confident in the ability
and the resilience of the system.
Alison Greenberg is OUTFRONT.
She is the CEO of Ruth Health.
It's a maternity care startup
that has money deposited in Silicon
Valley Bank.
So, Alison,
thank you very much for being with me.
So you are right in the middle of this.
Let's just start with.
When you realized you
a startup, you've got money at this bank.
You're using that money to make payroll
and other things.
When did you find out
something was wrong?
So my co-founder, Audrey Wu,
and I received an email
from one of our seed investors.
The email seemed cryptic.
It was strange. It was urgent.
It was not like the other email he sends
And we were in meetings.
You know, we run a busy
maternal health startup.
We have so many concerns every day
that this email just didn't make sense.
So a few hours later,
I called the investor and I said, Hey,
what was this email about?
He was out of breath,
like he had just run a marathon.
And he said, Take your money out of SBB,
go into your account,
take your money out as soon as possible.
And, you know, as a business owner,
my co-founder,
Adrian
I constantly think about two things.
We think about our team,
the people we employ and their families.
And we think about our patients,
the mothers, the new moms
and the families that we support
and their families.
And so for us, it was do this now
or else. Okay.
And this was what, yesterday
or the day before?
This was yesterday
between the hours of noon and 3 p.m..
Yesterday between the hours of noon
and 3 p.m.
you get this.
So then you do it. You go and you.
And how does that happen?
They actually give you the money
I mean, these are the 3 hours
before the world fell apart.
So what happened then?
Well,
we were incredibly lucky
to have that news early from an investor.
We didn't withdraw the money immediately.
You know,
we're conscientious business owners.
We spoke to a few other investors.
We spoke to friends.
I mean,
this is like calls going off the hook
for the last 36 hours.
When we felt confident
that this was going to be a crisis.
Audrey acted fast.
And this is the kind of fear
that actually incites focus.
We withdrew the money
through transfers and wires
as soon as possible.
I mean, she was withdrawing
small amounts,
big amounts
just to not set off an eye
that might limit our withdrawals.
And we were able to remove
this was not our only bank account,
but we were able
to remove the majority of the funds
so that what was left
when the website crashed
was below the $250,000.
Right. So you have money there.
And I know the FDIC in terms of
because the amount
I mean, obviously
had a lot more than that there.
You were able to get that out.
The amount that you have
that's insured now
by the FDIC, the 250,000.
Your understanding
is you're going to get that
pretty much right away.
What we're hearing is by Monday. Okay.
So that that
I think that should give people calm.
The FDIC
if you're under the limit
it gives you
is a holding is holding strong on this.
So Barron's is reporting
that the CEO Greg Becker
I just mentioned him
I know you weren't on that call,
but he had that call
that he sold nearly $3.6 million in stock
less than two weeks ago.
That's obviously worth zero tonight.
I know you don't necessarily know
the circumstances of that.
And I'm not trying to say
it was nefarious I'm just saying.
What's your reaction when you hear that?
Erin, my reaction is
that this is so much bigger than a bank.
I run a nationwide telehealth company.
We serve,
you know, prenatal
and postpartum patients.
I have friends in health care, tech
and financial tech and property tech,
all of us see the impact on human life.
And so for us,
you know,
call with the CEO of the bank
is not our first priority.
Our first priority is securing
those funds.
And making sure we can meet
payroll on the 15th.
So, you know, the human impact of this,
I think, is something
I cannot underscore enough.
And, you know,
my heart goes out to
so many business owners,
not just startups, but small business,
agriculture,
all the kinds of companies
that bank with us
where their founders
and owners are struggling right now,
trying to make ends meet,
trying to make sense of you fear.
And what you see is,
I mean, we're
not even talking about other banks.
We're talking about ASB itself,
but that the impacts
of this are significant
I mean, they will affect
everyday Americans.
They will not just affect CDOs like me.
We have team members in Arkansas,
North Carolina,
Washington State, Minnesota,
those people would be affected, too,
had we not gotten those
funds out in time.