Sorting fact from fiction in Silicon Valley Bank blame game

After the stunning collapse on Friday of a major bank for the technology sector, critics on both sides of the aisle have blamed their political opponents for contributing to the meltdown.

Silicon Valley Bank, a midsized institution that finished last year with nearly $200 billion in deposits, shuttered Friday and reopened on Monday under the direction of federal regulators.

The blame game started almost immediately in Washington and on Wall Street as fears of a broader fallout mounted.

Here are the facts surrounding some of the loudest claims about SVB.

SVB’s leaders had made a series of investments over the past two years that put the bank in a position of weakness, but the sudden nature of the collapse last week materialized when its clients began to panic and attempt to withdraw their money en masse.

The bank had swelled in size since 2021 because cash was flowing freely and more companies from the tech industry were putting their money into SVB than ever before. Deposits at SVB doubled in 2021, and the bank found itself with more money than it could lend out to the startups, venture capitalists, and tech companies that typically line up to do business with it.

SVB executives put chunks of that new cash into investments that are usually considered low-risk: government bonds and government-backed mortgage securities, the latter of which are more highly regulated after the 2008 financial crisis.