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WaPo: Silicon Valley Bank failure raises fear of broader financial contagion

Silicon Valley Bank failure raises fear of broader financial contagion

By at Washington Post

Friday’s implosion of Silicon Valley Bank could blow a hole in the most innovative corner of the U.S. economy, interrupt tech workers’ paychecks and push other regional banks into similar distress. But one thing it doesn’t seem likely to do — at least for now — is trigger a wider financial meltdown, banking experts said.

Unlike the giant banks that ignited a global crisis in 2008, SVB was heavily dependent upon a single risky sector of the economy for both its depositors and its customers. That concentrated bet proved to be very bad news for the ambitious start-ups that dominate the high-technology world. But it means that the tech-friendly bank lacked the sophisticated financial entanglements with other institutions that can turn one bank’s losses into a threat to the entire industry.

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Image: An office building at 3003 Tasman Drive in Santa Clara, California; at the time this photo was taken, it was home to the headquarters of Silicon Valley Bank. Photographed by user Coolcaesar on September 4, 2022.

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