[TalBlack]

Ok so where did those total deposits go? What ate them

[blackdog]

Here's the rub....Tech firms weren't making any money. They were borrowing "earnings" at 1.5% and enjoying speculative stock values rising 5% every quarter. As long as cash is available for less than 5%, the scheme continues.

Uh-oh! Cash is at 5.5%. "Big Bada-Boom"!

[POWG]

The deposits are loaned out for cars, real estate or whatever. The loans are the assets and deposits are the liabilities. Only a small part of the deposits are kept on hand (liquid) for day to day transactions.

[grey_whiskers]

[roadcat]

Ok so where did those total deposits go? What ate them

In a nutshell, actions by the Fed raising interest rates. The bank has depositor money on its hands, and invested the money into loans at higher interest rates than what they pay out to depositors. Unfortunately, the only loans they could find locked them into up to 1.56 interest rates over ten year periods. This is billions of dollars. Then the Fed raised rates, and interest rates ranged from 3.5 to 5 percent. Depositors pulled money, and the bank was stuck waiting for the ten-year loans so had to sell the ten-year loans at a huge loss in order to pay money out to depositors. More money paid out than what they have on hand. Bank scrambled for help from other institutions but failed.

[chuck allen]

SANTA CLARA, CALIF. – January 10, 2022—Silicon Valley Bank, the bank of the world’s most innovative companies and their investors, today announced it has committed to provide at least $5 billion by 2027 in loans, investments and other financing to support sustainability efforts and the company has set a goal to achieve carbon neutral operations by 2025.

“Our ability to make a meaningful difference for people and the planet, and to address the systemic risk that climate change presents, is magnified by the outsized impact our innovative clients make,” said Greg Becker, CEO, Silicon Valley Bank. “Over the last 12 years, our Climate Tech and Sustainability and Project Finance teams, for example, have supported hundreds of companies that are working to accelerate the transition to a more sustainable, low carbon world.”

SVB’s sustainable finance commitment aims to support companies that are working to decarbonize the energy and infrastructure industries and hasten the transition to a sustainable, net zero emissions economy in several related sectors:

Circular economy
Climate resilience
Energy efficiency and demand management
Green buildings
Renewable energy, energy storage and grid infrastructure
Sustainable agriculture and alternative foods
Sustainable transportation
Technology solutions that mitigate greenhouse gas emissions
Waste management and pollution control
Water technology