Silicon Valley Bank: what went wrong & what lies ahead for the US economy

At the end of 2022, Silicon Valley Bank (SVB) was the 16th largest bank in the US by consolidated assets.

It’s now the second largest bank to collapse in US history.

The rise and fall of SVB: a microcosm for the US economy

Tailored towards US venture-backed technology companies, SVB was at the forefront of the huge malinvestment that was generated from QE, ZIRP and enormous money printing. Its rise and fall thus serves as an important microcosm for the wider US economy.

The extraordinarily loose financial conditions fostered during much of the COVID era, created an environment that fostered vast speculatory activity, and huge demand for anything growth and tech related. The flurry of IPOs and private VC funding that found its way into the tech sector, meant that SVB saw astounding deposit growth over the past three years, with deposits rising from an average of $55bn in 2019, to $186bn in 2022 — an increase of 3.4x in just three years!

Though with QE reverting to QT, the Fed raising rates …