It’s 1929 all over again as Silicon Valley Bank, the nation’s 16th largest with numerous retail branches in Massachusetts, was shut down Friday in the largest U.S. bank failure since the Great Recession.
A local police officer exited the bank’s branch in Wellesley at around 11:35 a.m. to announce to the throng of people desperate to access their savings that the FDIC had closed the bank.
It wasn’t just in Massachusetts but nationwide as the Federal Deposit Insurance Corporation, the federal agency created to maintain the stability of the nation’s financial institutions, announced Friday morning that it had closed all 17 locations of Silicon Valley Bank, a tech-focused investment bank headquartered in Santa Clara, Calif.
Those include eight in Massachusetts. Six of those are former branches of Boston Private, which SVB bought in June 2021, including in Wellesley, in Boston’s Post Office Square and in Beverly. Full-service locations that did not originate as Boston Private locations are at 53 State St. in Boston and 275 Grove St. in Newton.
The FDIC created the Deposit Insurance National Bank of Santa Clara, to which the FDIC said it immediately transferred all insured deposits — which are accounts of up to $250,000 — of SVB. Those insured depositors should have full access to their accounts no later than Monday, when branches will temporarily re-open at normal business hours to handle claims, the FDIC announced.
Uninsured depositors, or those with accounts greater than $250,000, will “receive a receivership certificate for the remaining amount of their uninsured funds” and will be issued dividend payments from the sale of SVB’s assets with an advance “within the next week.” These depositors are directed to call the agency toll-free at 1-866-799-0959.
The Wellesley branch crowd was angry but more so confused. They asked for a Silicon Valley Bank representative to confirm the news, and so branch supervisor Dennis Staires came out and did so. Someone asked whether they could still access their safety deposit boxes. No, Staires told them; the bank was closed.
It was a scene playing out in towns across the country following the bank’s Thursday meltdown when its stock fell off the cliff — dropping 60% in one day. For those in the crowds, it’s feeling like 1929 all over again as customers converge on the bank’s locations in a modern-day bank run.
The bank had about $209 billion in total assets, and about $175.4 billion in total deposits at the end of last year, according to the FDIC. The bank’s shutdown had a ripple effect that sent stocks plunging, with the S&P 500 index slipping 1.4% for its worst week since September. The Dow Jones Industrial Average fell 1.1% and the tech-heavy Nasdaq composite dove 1.8%.
“Least they could do is open the door, tell people what’s going on,” said John McPartland III of Ashland at around 11:20 a.m. At that time, he was among the “50 other people” outside the Wellesley location on Washington Street.
“This is a harbinger of what’s coming next, pal. We’re heading lower, probably toward a depression,” he added.
He called back maybe 10 minutes later, at around 11:30 a.m. Friday, to say that he had “given up” and that the one or two people the bank had been letting in at the time had come out despondent and telling him that the bank had “run out of money” and was only allowing wire transfers — which they told him were not going through.
Lou Murray was inside the bank as the FDIC announced its closure.
“It was all at once a funereal feeling as well as a frenetic energy in the bank, with tellers and managers rushing to and fro to try to cut the last few cashier’s checks for people to close their accounts,” he told the Herald of the final moments of the bank.
He had gotten in line at around 10 a.m., he said, adding that “When I got there I knew. I could see the crowd forming and I said, ‘This is a run.'”
Murray, who is an occasional contributor to the Herald’s op-ed page, was one of the lucky few who was able to close his account there in full with a guaranteed cashier’s check. Others who sprinted to the location upon hearing the first whispers of a run were not as lucky.
SVB Bank’s parent company SVB Financial stock on Thursday plummeted 60%, a figure the Wall Street Journal reported is “its biggest one-day wipeout in history.”
That WSJ morning bulletin is what sent Wellesley resident and 41-year business owner named Peter, who preferred not to share his last name, straight out to the branch to take out at least some of the money in his business account to keep cash flowing for his business and to pay his employees.
“Right now there are a couple people who have told me that tried to do a wire transfer that was canceled and denied by the bank,” he told the Herald. “It reminds me of ‘A Wonderful Life.’ Let’s hope it doesn’t get to that.”
Within roughly an hour, Peter had tried calling the FDIC number three to four times and told the Herald he had been placed on hold for several minutes each time before the call was dropped.
McPartland said that he’s been with the bank for more than 20 years, or at least what the bank was. He had started his account when the bank was the forerunner to what became Boston Private, “a very good bank,” he said, “they always treated me with respect.”
Each of the people from the line who spoke with the Herald said they had begun their relationship with the bank when it was still Boston Private or one of that bank’s forerunners.
Peter said his only banking fear in his 68 years came during the 2008 Great Recession, when economic activity beginning in 2007 slid to its lowest point since the Great Depression hit in 1929.
