March 10, 2023 the United States government moved to seize the assets of Silicon Valley Bank, the 16th largest bank in the United States, after it failed. There was growing concern over the last week that the bank may fail with tech workers and venture capitalist companies moving to rapidly withdraw money due to anxiety created by the bank’s balance sheet spread.

This is not the first time a large financial institution like Silicon Valley Bank has failed. During the 2008 economic recession the much larger Washington Mutual bank failed, contributing to a series of events that led to the complete collapse of the financial sector. 

Experts speculate that this banking failure will not lead to an economic crisis, as many of the nation’s top banks remain financially stable. Still, many remain concerned that Silicon Valley Bank’s failure will have catastrophic negative effects on California’s technology sector based in Silicon Valley.

Other concerns revolve around the long-term consequences of this collapse, as many private venture-based companies may be unable to borrow enough money to fully fund innovation and expansion efforts. Some have called for heightened government intervention in the banking sector to help prevent further degradation of the market; a targeted government bailout is a possibility.

What is abundantly clear is that many major companies based in the Silicon Valley will be unable to pay their workers next week due to Silicon Valley Bank’s collapse, causing serious economic insecurity for the hundreds of thousands of workers who rely on weekly paychecks to pay the bills.