By Joseph Geha. San Jose Spotlight via Bay City News.
In the wake of Silicon Valley Bank's tumultuous closure and a weekend of uncertainty that has dominated national headlines, the local impact of the financial institution's collapse in the tech-driven region was clear to the dozens of people who lined up outside the bank's Santa Clara branch Monday.
They all expected to access their accounts and keep the lights on in their businesses.
“The last few days have been a little stressful,” Karthik Ramalingam told San José Spotlight. Ramalingam and his wife, who did not want to be identified, are the co-founders of CodeLinkd, a company that teaches kids how to code.
Ramalingam was one of about 50 people milling around outside the bank at one point, some with camping chairs. Many chatted quietly about their worries about the bank's collapse, while others nervously checked their phones and made calls.
Security guards escorted government officials and customers in and out of the building one at a time.
Federal officials shut down the bank on Friday after uncertainty about its solvency led to a run on the bank — a rush of customers to withdraw funds faster than the bank could keep up.
On Sunday night, the Federal Reserve Board said it would protect all depositors at Silicon Valley Bank and New York-based Signature Bank, which closed on Sunday, allowing customers to access all their funds beyond the $250,000 insured by the Federal Deposit Insurance Corporation (FDIC).
Ramalingam and his wife plan to withdraw their funds and redeploy them to other banks, hoping to avoid a similar fate in the future by not having all of their business funds tied up in a single financial institution.
“We are just waiting to get through the line and get our money,” Ramalingam’s wife said. “We have been shopping with other banks today to open accounts. I think it is a good lesson for us to know how to diversify.”
Another man who runs a venture capital firm in Los Altos said several of his portfolio businesses are deposited at Silicon Valley Bank, as are his personal funds. He hoped to avoid having to deal with the bank's swamped website and pick up cashier's checks for his company and several of his portfolio businesses on Monday.
He said the past three days have been stressful and asked not to be identified to protect the companies' privacy.
“I was trying to figure out within my portfolio who had exposure to SVB, what the level of that exposure was, and then we immediately started focusing on what these companies needed to make their March payroll,” he told San José Spotlight.
He said the government's actions to ensure businesses can get their cash out are giving everyone a break, but uncertainty remains.
“My businesses are not completely out of the woods yet, because while the funds are there and backed by the government, access to those funds is still delayed,” he stressed. “So once we have access and can process payroll and transfer those funds to another account, I think everyone will feel relieved.”
A man named Phillip, who did not give his last name, rushed to the bank on Monday afternoon shortly before 2:30 p.m. He was told the branch would close at 3 p.m., but officials had closed early because of the number of customers they had.
“I called the FDIC this morning, they were constantly busy, of course I expected that,” Phillip told San José Spotlight. “The bank’s website was working, but I wanted to get all my money out today.”
Phillip runs a medical device startup in San Jose and said he will likely be back at the bank branch early Tuesday morning to make sure he can get his money and make payroll for his small business.
"I have to do this as soon as possible, otherwise we will stop operating."
Following the closure of Silicon Valley Bank, hundreds of business and venture capital leaders from across Silicon Valley spoke with Rep. Ro Khanna on Friday to express their concerns about both the short-term solutions that have begun to be worked out and the long-term implications of the bank's collapse.
Brook Byers, a senior partner at legendary Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers, was one of many who said Silicon Valley Bank was more than just a checking account for many tech companies, offering them tools and connections in the industry.
“It helps and has benefited thousands of companies and hundreds of thousands, if not millions, of employees who are our nation’s technology and biotechnology innovators. This is our competitive resource,” Byers stressed. “This is the nation’s technological backbone and our competitiveness with China and Russia and around the world.”
Khanna agreed, saying the bank has helped shape the business plans and companies of many Valley entrepreneurs. Looking ahead, Khanna said the FDIC and government should “over-communicate” about every step of the process of taking over the bank and helping customers.
“There are so many questions that people have,” Khanna said.
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