By Joseph Geha. San Jose Spotlight via Bay City News.
In the wake of the tumultuous closure of Silicon Valley Bank and a weekend of uncertainty that has grabbed national headlines, the local impact of the collapse of the tech-driven financial institution in the region was made clear to the dozens of people who lined up outside. from the bank this Monday at the Santa Clara branch.
They all expected to access their accounts and keep the lights on in their businesses.
"The last few days have been a bit stressful," Karthik Ramalingam told San José Spotlight. Ramalingam and his wife, who did not want to be named, are the co-founders of CodeLinkd, a company that teaches children to code.
Ramalingam was one of nearly 50 people milling outside the bank at any given time, some with camping chairs. Many chatted quietly about their concerns 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 closed the bank on Friday after uncertainty about its solvency led to a run on the bank: a mob of customers rapidly withdrawing funds faster than the bank could keep up.
On Sunday night, the Federal Reserve Board said it would protect all depositors at New York-based Silicon Valley Bank and Signature Bank, which closed on Sunday, by allowing customers access to all their funds beyond the 250 thousand dollars insured by the Federal Deposit Insurance Corporation ?FDIC, for its acronym in English?.
Ramalingam and his wife plan to withdraw their funds and redistribute 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 cross the line and get our money," Ramalingam's wife said. “Today we have been buying with other banks to open accounts. I think it's a good lesson for us to know how to diversify."
Another man who runs a Los Altos venture capital firm said several of his portfolio businesses are on deposit with Silicon Valley Bank, as are his personal funds. He was hoping to avoid having to deal with the bank's flooded website and pick up cashier's checks for his company and several of the businesses in his portfolio on Monday.
He said the past three days have been stressful and asked not to be named to protect the companies' privacy.
“I was trying to figure out within my portfolio who had SVB exposure, what the level of that exposure was, and then we immediately started focusing on what these companies needed to do their March payroll,” he told San José Spotlight.
He said the government's actions to ensure businesses can get their cash out allows everyone to take a breather, but uncertainty remains.
"My companies 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 be relieved."
A man named Phillip, who did not give his last name, rushed to the bank Monday afternoon just before 2:30 p.m. He was told that the branch would close at 3:00 p.m., but the officers had closed early due to the number of customers they had.
"I called the FDIC this morning, it was constantly busy, of course I expected that," Phillip told San José Spotlight. "The bank's website was up, but I wanted to get all my money out today."
Phillip runs a new medical device company in San Jose and said he'll probably head back to the bank branch early Tuesday morning to make sure he can get his money and pay his small business payroll.
“I have to get this done ASAP, otherwise we will stop trading.”
In the aftermath of Silicon Valley Bank's closure, 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 crafted and the implications for long term of the bank's collapse.
Brook Byers, senior partner at legendary Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers, was one of many who said that Silicon Valley Bank was more than just a checking account for many tech companies, offering them tools and industry connections.
“It helps and has benefited thousands of businesses and hundreds of thousands, if not millions, of employees who are our nation's technology and biotech innovators. This is our competitive resource,” Byers stressed. "This is the technological backbone of the nation and our competitiveness with China and Russia and around the world."
Khanna agreed, saying the bank has helped shape the business plans and ventures of many valley entrepreneurs. Looking ahead, Khanna said the FDIC and the government should be "over-communicating" about every step of the process of taking over the bank and helping customers.
"There are so many questions that people have," Khanna said.
The original story can be read by giving click here.
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