How Silicon Valley Turned on Silicon Valley Bank

Max Cho found himself in the middle of a bank run while sitting on a shuttle bus in Montana. 

The co-founder of insurance startup Coverage Cat, Mr. Cho had landed at the Bozeman airport Thursday and boarded the bus for the hourlong drive to a startup founders’ retreat in Big Sky. 

Mr. Cho took his seat and scanned the group. Fellow passengers were frantically tapping on their phones, rushing to move their money. “The bank run,” he realized, “was actually happening.”

Silicon Valley had turned on Silicon Valley Bank. 

By the time the lender closed for business Thursday, depositors had attempted to withdraw $42 billion. The Federal Deposit Insurance Corp. seized the bank before it could open Friday morning. It was the second biggest bank failure in U.S. history. Only the 2008 collapse of Washington Mutual Inc. COOP -2.07% was bigger.