How the fall of Silicon Valley Bank will impact hundreds of Arizonans

Silicon Valley Bank, based in California, specializes in start up businesses and went under on March 10. It's being called one of the biggest bank failures in more than a decade.

It sent panic across the tech industry, but how is that threatening jobs in Arizona? For one, there are hundreds of jobs on the line as SVB has had a presence in Tempe since 2012.

With hundreds of employees, the bank specializes in working with tech startups that typically haven’t been able to secure funding from more traditional banks.

The companies relying on SVB are federally insured for up to 250,000.

Arizona State Economics professor Dennis Hoffman calls this a liquidity issue for depositors, but only temporarily.

"Depositors, people that do ordinary transactions with this particular institution, are not going to lose anything," he said.

According to the FDIC, the bank had $209 billion in assets and $175.4 billion in deposits at the time of failure. According to SVB's own filings, a vast majority of their customers had significantly larger sums than the $250,000 FDIC insured limit – money the companies use for anything from payroll to product investment.

"We will get access to $250,000 on Monday. After that, trying to get access to the remaining capital is going to take months. The reality is we can't operate our business without accessing some capital. So our options are basically to go find debt until we can get access to this capital," explained Stefan Kalb, CEO of Shelf Engine.

While over time, those depositors are expected to recoup their money. Investors are not as lucky.

This is all a direct result of customers attempting to withdraw their money from SVB a week prior over concern of the bank’s financial stability. This is what’s commonly referred to in the financial world- as a "bank run."

"More people walked in walking their money than usual because there was a panic, and boom," Hoffman said.

The timeframe could be enough to send these companies into debt, have a problem paying employees, or even force some of them to shut down.

Biden sends reassurance

President Joe Biden on Monday told Americans the nation’s financial systems were safe, seeking to project calm following the swift and stunning collapse of two banks that prompted fears of a broader upheaval.

"Your deposits will be there when you need them," he said.

The president, speaking from the White House shortly before a trip to the West Coast, said he’d seek to hold those responsible accountable, and pressed for better oversight and regulation of larger banks. And he promised no losses would be borne by taxpayers.

"We must get the full accounting of what happened," he said. "American can have confidence that the banking system is safe."

Biden also said management of the banks should be fired. "If the bank is taken over by the FDIC, the people running the bank should not work there anymore," he said, referring to the Federal Deposit Insurance Corp., the agency responsible for ensuring the stability of the banking system.

At more than $110 billion in assets, Signature Bank is the third-largest bank failure in U.S. history. Another beleaguered bank, First Republic Bank, announced Sunday that it had bolstered its financial health by gaining access to funding from the Fed and JPMorgan Chase.