The Tech Bank Falls. SVB, the backbone of the startup ecosystem, failed in 48 hours. A $1.8B loss on bond sales triggered a $42B deposit flight in a single day—the fastest bank run in history, fueled by Twitter panic.
Duration Risk: The bank had invested short-term deposits into long-term bonds when rates were low. As the Fed hiked rates, the value of these bonds plummeted, leaving the bank insolvent when depositors demanded their cash.
Systemic Risk: The FDIC has stepped in, but fears are mounting for other regional banks with similar profiles. The 'BTFP' facility is being deployed to stop the bleeding.