Two Days in the Valley

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Happy Wednesday, and welcome back to Dry Powder.

It should come as no surprise that just as the dust is beginning to settle amid the rubble of Silicon Valley Bank, the rumor mill is kicking into overdrive. In today’s issue, a close look at the circulating theories about what actually precipitated one of the largest bank failures in U.S. history—and who stands to benefit from the reconstruction of its business.

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Two Days in the Valley

A postmortem of an abbreviated financial crisis, and a look ahead to the next one in our social media age.

WILLIAM D. COHAN

Now that the fever at Silicon Valley Bank appears to have broken, a clearer picture is emerging. SVB, despite its more than $200 billion in deposits, was not a traditional retail bank. It only had around 27 bank branches scattered around NorCal, Texas, New York, Atlanta, Washington D.C. and in Boston, where it had acquired a private bank. Instead, it was at the center of a very unique financial ecosystem, based in Silicon Valley, and composed of tech bros, venture capital firms and their portfolio companies. It also acted more like an investment bank than a commercial bank, taking risks that much more conservatively run banks would never have assumed. (It actually owned an investment bank too, SVB Securities, that still specializes in underwriting and advising tech and healthcare companies.) But when your clientele is part of the FOMO, fast-money crowd, I guess you have to cater to them, or...

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FOUR STORIES WE’RE TALKING ABOUT