Silicon Valley Bank, a major lender for the tech sector, has been shut down by California regulators.
The bank had lent to private equity funds, venture capital firms, and tech companies based in the San Francisco Bay area.
However, the bank made a lot of bets on where interest rates would be, and when interest rates rose, they had to sell their portfolio of treasuries and mortgage-backed securities at a loss.
As a result, some of the bank’s depositors pulled their money out, causing investors to sell off the stock.
While the bank’s customers are companies, not individuals, this is still the largest bank failure since 2008, and the 16th largest bank to go into FDIC receivership.