Silicon Valley Bank: A Tale of Hubris, Risk, Forbearance, and Failure

This case study describes several factors that contributed to the demise of Silicon Valley Bank. The bank took on substantial risks and did not take the necessary precautions to hedge those risks. Changes in bank regulations and a delay in implementing those regulations allowed SVB to operate mostly unchecked, even as it grew very rapidly and increased its risk-taking. When the Federal Reserve Bank did provide notices of concern, senior management failed to take those warnings seriously. When the Fed did provide notices of concern, senior management failed to take those warnings seriously. Finally, the Fed’s regulatory response to SVB was rather lackluster.