Big tech has long thought itself above the state. Silicon Valley Bank’s meltdown is stark proof that it isn’t | James Ball

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In the US, the Federal Reserve has stepped in to guarantee deposits. The tech sector should realise it can’t go it alone, says James Ball, of The Bureau of Investigative Journalism

in the US by being the darling of west coast tech startups, but it transpires that it expanded at the expense of managing its exposure to risk.services to more than 2,500 venture capital firms – companies that invest in startups with the hope that they’ll achieve long-term growth – and nearly half of the US’s venture-capital-backed technology and life-science companies.

VCs and startups were allowed to keep multimillion-dollar balances with the bank when only $250,000 per account is insured by the federal government. The bank had done virtually nothing to hedge itself against increasing interest rates , and hadAs interest rates increased, investing and running companies became more costly and clients began to withdraw cash. SVB began to look for ways to cover these withdrawals, sold some of its bond portfolio at a loss, and then failed to find a buyer.

, again focused in the tech sector. Inevitably, calls came in for someone to step in and do something.

 

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