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6 things you NEED to know about the Silicon Valley Bank collapse

March 15, 2023
NurPhoto / Contributor | Getty Images
Katarina Bradford

Silicon Valley Bank's collapse is sparking traumatic memories of the 2008 financial crash. Should we be worried SVB is signaling a similar economic catastrophe, or is everyone overreacting to the media's hype? Glenn told his listeners to be "healthily terrified." This event is sure to have ripple effects throughout the economy, but the more you are informed about it, the more you can prepare. Here are 6 things you need to know about Silicon Valley Bank's crash—explained in simple words.

1. The short answer to what happened: SVB didn't have enough money to pay its depositors.

Remember the scene from It's a Wonderful Life when all of the residents make a run on George Bailey's bank demanding their money? Fortunately for them, their money was in the altruistic hands of George Bailey, who used his honeymoon savings to give the depositors the money they demanded.

Silicon Valley Bank's depositors weren't so lucky.

In short, the depositors made a run on Silicon Valley Bank, demanding the withdrawal of their money. But SVB simply didn't have the liquid money available to give their depositors, causing regulators to shut down the bank shortly afterward.

2. It all started with COVID...

Why didn't SVB have enough money for its depositors? To explain this, we have to go back to the pandemic era.

The pandemic saw a rapid decrease in spending and a massive increase in bank deposits. Due to the uncertainty of the future and lockdowns limiting ways to spend money on recreational activities, like restaurants, bars, and other outlets, many Americans stocked up money in their accounts. In fact, SVB's deposits doubled in 2021 alone, bringing in more money than they could lend out to their clients.

To make a return on their available cash, SVB wanted to invest it, as many banks do. Since they had reached their lending limit, they decided to invest it in U.S. Treasury Securities, which are the government's means of funding itself without using taxation (in a nutshell). These are considered "ultra-safe" investments because they are backed by the "full faith and credit of the federal government."

Unlike other forms of investments, investing in Treasuries means the government will do everything within its legal power to pay back the money used to fund itself. In other words, it is typically very safe... so what happened?

3. Then came the magic cocktail—record-high inflation and rising interest rates...

Interest rates ruined the typically "ultra-safe" investment. Due to 40-year record-high inflation, the Fed lifted rates eight times by a total of 4.25 percentage points in 2022, raising interest rates from 0.25 percent to 4.375 percent. This means the value of U.S. Treasuries investments plummeted rapidly. SVB reported that it lost $1.8 billion due to the decreased value of its Treasuries investments after a year of rising interest rates.

This raises the following question: why didn't SVB just weather the storm and wait for interest rates to decrease? There are two issues with this. The first is that, with so many of their assets held up in Treasuries investments, SVB still wouldn't have enough liquid assets to give their depositors during the bank run.

The second issue is that Treasuries investments have a ten-year limit. In 2021 during the Trump administration, interest rates were at an all-time low of 0.125 percent.

The record-fast increase of interest rates in 2022 caused very little chance for rates to go back down to their historic 2021 lows within ten years for banks to make their money back on their investments.

To avoid this, SVB planned to sell their investments at a loss and re-purchase Treasuries investments at the decreased value, giving them an extra ten years to bet on decreased interest rates in the future.

But people caught on to SVB's plan and didn't want to ride with the risk.

4. Account holders withdrew their money... FAST.

As aforementioned, SVP lost $1.8 billion when it sold its depleted Treasuries investments. While they were betting on being able to re-purchase the devalued securities, hoping that they would go up in value in the future with lowered interest rates, investors were worried about the risk.

Once they made the announcement of their $1.8 billion loss, their stocks began to drop, and venture capitalists warned the companies they invest in to pull out of SVB. This had a snowball effect, leading to a "bank run" of depositors demanding to withdraw their money from their SVB accounts.

This led to the perfect storm: SVB's investment losses coupled with the influx of withdrawals were so immense that regulators had to step in and shut the bank down to protect depositors. The government currently "running" SVB, for all practical purposes, is the Federal Deposit Insurance Corporation (FDIC). The FDIC closed SVB on Friday and reopened the bank on Monday, March 13th as the Deposit Insurance Bank of Santa Clara.

5. Some people may lose their money. 

Banks insure accounts with $250,000 or less with FDIC insurance. That means, in cases of bank failure, exactly like this one, the FDIC covers all accounts less than $250,000. The FDIC said SVB customers who had less than $250,000 in their accounts will have access to all of their money when the bank reopens. Since it reopened this week, they should have access to their funds.

However, many of SVB's depositors had more than $250,000 in their accounts—it is Silicon Valley after all. Therefore, their accounts were not covered by FDIC insurance. Will they get their money back? There is a chance that they will not.

It is unclear how much SVB currently has to cover uninsured deposits. It is likely not enough. The FDIC has issued a "Receiver's Certificate" to the uninsured account holders with the amount in their account that is not covered by FDIC insurance.

The FDIC said it will pay some of the uninsured deposits by next week by liquidating any additional assets held by SVB. However, if the liquidated assets are not enough, many of SVB's uninsured account holders could lose their money for good.

6. Is this 2008 all over again?

SVB's collapse was the largest bank failure since 2008, when Washington Mutual failed with $307 billion in assets. Its failure, along with the collapse of the Lehman Brother's investment bank, triggered the worst financial crisis since the Great Depression. Are we in danger of repeating 2008?

Some argue that we are not in danger of another economic catastrophe, simply because SVB holds less than 1 percent of the nation's assets. However, as Glenn warns, there is a danger of banks repeating the same mistakes as SVP.

SVP wasn't the only bank to use its surplus deposits to invest in U.S. Treasuries, which means that other banks are wrestling with the depleted value of their securities investments due to rising interest rates.

Bank of America, for example, lost $109 billion in their securities investments due to rising interest rates, the most among its peers—and Bank of America is no small fish in the ocean of assets.

Other major banks recorded other massive losses in their securities investments due to rising interest rates. JP Morgan Chase lost $36 billion, Wells Fargo lost $41 billion, Citigroup lost $25 billion, and Goldman Sachs lost $1 billion. If the little banks collapse, will they get the same effort and attention from the federal government as the "big guys?"

The critic may argue that these are still small values given the incredibly large amount of assets held in banks nationwide. However, this is missing the point. Major banks have majorly invested in securities since the pandemic-era skyrocketing rate of deposits. Now those investments are depleted in value.

They can either sell those investments at a loss, or they can wait and hope that they will recover over time. However, if those investments are no longer liquid, what happens when their depositors come knocking? Will they have enough liquid assets to cover a massive bank run? These are the lingering questions that our banks need to address.

As Glenn says, this will impact you—it is only a matter of time. What will you do to prepare?

Why do Americans feel so empty?

Mario Tama / Staff | Getty Images

Anxiety, anger, and chronic dissatisfaction signal a country searching for meaning. Without truth and purpose, politics becomes a dangerous substitute for identity.

We have built a world overflowing with noise, convenience, and endless choice, yet something essential has slipped out of reach. You can sense it in the restless mood of the country, the anxiety among young people who cannot explain why they feel empty, in the angry confusion that dominates our politics.

We have more wealth than any nation in history, but the heart of the culture feels strangely malnourished. Before we can debate debt or elections, we must confront the reality that we created a world of things, but not a world of purpose.

You cannot survive a crisis you refuse to name, and you cannot rebuild a world whose foundations you no longer understand.

What we are living through is not just economic or political dysfunction. It is the vacuum that appears when a civilization mistakes abundance for meaning.

Modern life is stuffed with everything except what the human soul actually needs. We built systems to make life faster, easier, and more efficient — and then wondered why those systems cannot teach our children who they are, why they matter, or what is worth living for.

We tell the next generation to chase success, influence, and wealth, turning childhood into branding. We ask kids what they want to do, not who they want to be. We build a world wired for dopamine rather than dignity, and then we wonder why so many people feel unmoored.

When everything is curated, optimized, and delivered at the push of a button, the question “what is my life for?” gets lost in the static.

The crisis beneath the headlines

It is not just the young who feel this crisis. Every part of our society is straining under the weight of meaninglessness.

Look at the debt cycle — the mathematical fate no civilization has ever escaped once it crosses a threshold that we seem to have already blown by. While ordinary families feel the pressure, our leaders respond with distraction, with denial, or by rewriting the very history that could have warned us.

You cannot survive a crisis you refuse to name, and you cannot rebuild a world whose foundations you no longer understand.

We have entered a cultural moment where the noise is so loud that it drowns out the simplest truths. We are living in a country that no longer knows how to hear itself think.

So people go searching. Some drift toward the false promise of socialism, some toward the empty thrill of rebellion. Some simply check out. When a culture forgets what gives life meaning, it becomes vulnerable to every ideology that offers a quick answer.

The quiet return of meaning

And yet, quietly, something else is happening. Beneath the frustration and cynicism, many Americans are recognizing that meaning does not come from what we own, but from what we honor. It does not rise from success, but from virtue. It does not emerge from noise, but from the small, sacred things that modern life has pushed to the margins — the home, the table, the duty you fulfill, the person you help when no one is watching.

The danger is assuming that this rediscovery happens on its own. It does not.

Reorientation requires intention. It requires rebuilding the habits and virtues that once held us together. It requires telling the truth about our history instead of rewriting it to fit today’s narratives. And it requires acknowledging what has been erased: that meaning is inseparable from God’s presence in a nation’s life.

Harold M. Lambert / Contributor | Getty Images

Where renewal begins

We have built a world without stillness, and then we wondered why no one can hear the questions that matter. Those questions remain, whether we acknowledge them or not. They do not disappear just because we drown them in entertainment or noise. They wait for us, and the longer we ignore them, the more disoriented we become.

Meaning is still available. It is found in rebuilding the smallest, most human spaces — the places that cannot be digitized, globalized, or automated. The home. The family. The community.

These are the daily virtues that do not trend on social media, but that hold a civilization upright. If we want to repair this country, we begin there, exactly where every durable civilization has always begun: one virtue at a time, one tradition at a time, one generation at a time.

This article originally appeared on TheBlaze.com.

The Bubba Effect erupts as America’s power brokers go rogue

Gary Hershorn / Contributor | Getty Images

When institutions betray the public’s trust, the country splits, and the spiral is hard to stop.

Something drastic is happening in American life. Headlines that should leave us stunned barely register anymore. Stories that once would have united the country instead dissolve into silence or shrugs.

It is not apathy exactly. It is something deeper — a growing belief that the people in charge either cannot or will not fix what is broken.

When people feel ignored or betrayed, they will align with anyone who appears willing to fight on their behalf.

I call this response the Bubba effect. It describes what happens when institutions lose so much public trust that “Bubba,” the average American minding his own business, finally throws his hands up and says, “Fine. I will handle it myself.” Not because he wants to, but because the system that was supposed to protect him now feels indifferent, corrupt, or openly hostile.

The Bubba effect is not a political movement. It is a survival instinct.

What triggers the Bubba effect

We are watching the triggers unfold in real time. When members of Congress publicly encourage active duty troops to disregard orders from the commander in chief, that is not a political squabble. When a federal judge quietly rewrites the rules so one branch of government can secretly surveil another, that is not normal. That is how republics fall. Yet these stories glided across the news cycle without urgency, without consequence, without explanation.

When the American people see the leadership class shrug, they conclude — correctly — that no one is steering the ship.

This is how the Bubba effect spreads. It is not just individuals resisting authority. It is sheriffs refusing to enforce new policies, school boards ignoring state mandates, entire communities saying, “We do not believe you anymore.” It becomes institutional, cultural, national.

A country cracking from the inside

This effect can be seen in Dearborn, Michigan. In the rise of fringe voices like Nick Fuentes. In the Epstein scandal, where powerful people could not seem to locate a single accountable adult. These stories are different in content but identical in message: The system protects itself, not you.

When people feel ignored or betrayed, they will align with anyone who appears willing to fight on their behalf. That does not mean they suddenly agree with everything that person says. It means they feel abandoned by the institutions that were supposed to be trustworthy.

The Bubba effect is what fills that vacuum.

The dangers of a faithless system

A republic cannot survive without credibility. Congress cannot oversee intelligence agencies if it refuses to discipline its own members. The military cannot remain apolitical if its chain of command becomes optional. The judiciary cannot defend the Constitution while inventing loopholes that erase the separation of powers.

History shows that once a nation militarizes politics, normalizes constitutional shortcuts, or allows government agencies to operate without scrutiny, it does not return to equilibrium peacefully. Something will give.

The question is what — and when.

The responsibility now belongs to us

In a healthy country, this is where the media steps in. This is where universities, pastors, journalists, and cultural leaders pause the outrage machine and explain what is at stake. But today, too many see themselves not as guardians of the republic, but of ideology. Their first loyalty is to narrative, not truth.

The founders never trusted the press more than the public. They trusted citizens who understood their rights, lived their responsibilities, and demanded accountability. That is the antidote to the Bubba effect — not rage, but citizenship.

How to respond without breaking ourselves

Do not riot. Do not withdraw. Do not cheer on destruction just because you dislike the target. That is how nations lose themselves. Instead, demand transparency. Call your representatives. Insist on consequences. Refuse to normalize constitutional violations simply because “everyone does it.” If you expect nothing, you will get nothing.

Do not hand your voice to the loudest warrior simply because he is swinging a bat at the establishment. You do not beat corruption by joining a different version of it. You beat it by modeling the country you want to preserve: principled, accountable, rooted in truth.

Adam Gray / Stringer | Getty Images

Every republic reaches a moment when historians will later say, “That was the warning.” We are living in ours. But warnings are gifts if they are recognized. Institutions bend. People fail. The Constitution can recover — if enough Americans still know and cherish it.

It does not take a majority. Twenty percent of the country — awake, educated, and courageous — can reset the system. It has happened before. It can happen again.

Wake up. Stand up. Demand integrity — from leaders, from institutions, and from yourself. Because the Bubba effect will not end until Americans reclaim the duty that has always belonged to them: preserving the republic for the next generation.

This article originally appeared on TheBlaze.com.

Grim warning: Bad-faith Israel critics duck REAL questions

Spencer Platt / Staff | Getty Images

Bad-faith attacks on Israel and AIPAC warp every debate. Real answers emerge only when people set aside scripts and ask what serves America’s long-term interests.

The search for truth has always required something very much in short supply these days: honesty. Not performative questions, not scripted outrage, not whatever happens to be trending on TikTok, but real curiosity.

Some issues, often focused on foreign aid, AIPAC, or Israel, have become hotbeds of debate and disagreement. Before we jump into those debates, however, we must return to a simpler, more important issue: honest questioning. Without it, nothing in these debates matters.

Ask questions because you want the truth, not because you want a target.

The phrase “just asking questions” has re-entered the zeitgeist, and that’s fine. We should always question power. But too many of those questions feel preloaded with someone else’s answer. If the goal is truth, then the questions should come from a sincere desire to understand, not from a hunt for a villain.

Honest desire for truth is the only foundation that can support a real conversation about these issues.

Truth-seeking is real work

Right now, plenty of people are not seeking the truth at all. They are repeating something they heard from a politician on cable news or from a stranger on TikTok who has never opened a history book. That is not a search for answers. That is simply outsourcing your own thought.

If you want the truth, you need to work for it. You cannot treat the world like a Marvel movie where the good guy appears in a cape and the villain hisses on command. Real life does not give you a neat script with the moral wrapped up in two hours.

But that is how people are approaching politics now. They want the oppressed and the oppressor, the heroic underdog and the cartoon villain. They embrace this fantastical framing because it is easier than wrestling with reality.

This framing took root in the 1960s when the left rebuilt its worldview around colonizers and the colonized. Overnight, Zionism was recast as imperialism. Suddenly, every conflict had to fit the same script. Today’s young activists are just recycling the same narrative with updated graphics. Everything becomes a morality play. No nuance, no context, just the comforting clarity of heroes and villains.

Bad-faith questions

This same mindset is fueling the sudden obsession with Israel, and the American Israel Public Affairs Committee in particular. You hear it from members of Congress and activists alike: AIPAC pulls the strings, AIPAC controls the government, AIPAC should register as a foreign agent under the Foreign Agents Registration Act. The questions are dramatic, but are they being asked in good faith?

FARA is clear. The standard is whether an individual or group acts under the direction or control of a foreign government. AIPAC simply does not qualify.

Here is a detail conveniently left out of these arguments: Dozens of domestic organizations — Armenian, Cuban, Irish, Turkish — lobby Congress on behalf of other countries. None of them registers under FARA because — like AIPAC — they are independent, domestic organizations.

If someone has a sincere problem with the structure of foreign lobbying, fair enough. Let us have that conversation. But singling out AIPAC alone is not a search for truth. It is bias dressed up as bravery.

Anadolu / Contributor | Getty Images

If someone wants to question foreign aid to Israel, fine. Let’s have that debate. But let’s ask the right questions. The issue is not the size of the package but whether the aid advances our interests. What does the United States gain? Does the investment strengthen our position in the region? How does it compare to what we give other nations? And do we examine those countries with the same intensity?

The real target

These questions reflect good-faith scrutiny. But narrowing the entire argument to one country or one dollar amount misses the larger problem. If someone objects to the way America handles foreign aid, the target is not Israel. The target is the system itself — an entrenched bureaucracy, poor transparency, and decades-old commitments that have never been re-examined. Those problems run through programs around the world.

If you want answers, you need to broaden the lens. You have to be willing to put aside the movie script and confront reality. You have to hold yourself to a simple rule: Ask questions because you want the truth, not because you want a target.

That is the only way this country ever gets clarity on foreign aid, influence, alliances, and our place in the world. Questioning is not just allowed. It is essential. But only if it is honest.

This article originally appeared on TheBlaze.com.

The melting pot fails when we stop agreeing to melt

Spencer Platt / Staff | Getty Images

Texas now hosts Quran-first academies, Sharia-compliant housing schemes, and rapidly multiplying mosques — all part of a movement building a self-contained society apart from the country around it.

It is time to talk honestly about what is happening inside America’s rapidly growing Muslim communities. In city after city, large pockets of newcomers are choosing to build insulated enclaves rather than enter the broader American culture.

That trend is accelerating, and the longer we ignore it, the harder it becomes to address.

As Texas goes, so goes America. And as America goes, so goes the free world.

America has always welcomed people of every faith and people from every corner of the world, but the deal has never changed: You come here and you join the American family. You are free to honor your traditions, keep your faith, but you must embrace the Constitution as the supreme law of the land. You melt into the shared culture that allows all of us to live side by side.

Across the country, this bargain is being rejected by Islamist communities that insist on building a parallel society with its own rules, its own boundaries, and its own vision for how life should be lived.

Texas illustrates the trend. The state now has roughly 330 mosques. At least 48 of them were built in just the last 24 months. The Dallas-Fort Worth metroplex alone has around 200 Islamic centers. Houston has another hundred or so. Many of these communities have no interest in blending into American life.

This is not the same as past waves of immigration. Irish, Italian, Korean, Mexican, and every other group arrived with pride in their heritage. Still, they also raised American flags and wanted their children to be part of the country’s future. They became doctors, small-business owners, teachers, and soldiers. They wanted to be Americans.

What we are watching now is not the melting pot. It is isolation by design.

Parallel societies do not end well

More than 300 fundamentalist Islamic schools now operate full-time across the country. Many use Quran-first curricula that require students to spend hours memorizing religious texts before they ever reach math or science. In Dallas, Brighter Horizons Academy enrolls more than 1,700 students and draws federal support while operating on a social model that keeps children culturally isolated.

Then there is the Epic City project in Collin and Hunt counties — 402 acres originally designated only for Muslim buyers, with Sharia-compliant financing and a mega-mosque at the center. After public outcry and state investigations, the developers renamed it “The Meadows,” but a new sign does not erase the original intent. It is not a neighborhood. It is a parallel society.

Americans should not hesitate to say that parallel societies are dangerous. Europe tried this experiment, and the results could not be clearer. In Germany, France, and the United Kingdom, entire neighborhoods now operate under their own cultural rules, some openly hostile to Western norms. When citizens speak up, they are branded bigots for asserting a basic right: the ability to live safely in their own communities.

A crisis of confidence

While this separation widens, another crisis is unfolding at home. A recent Gallup survey shows that about 40% of American women ages 18 to 39 would leave the country permanently if given the chance. Nearly half of a rising generation — daughters, sisters, soon-to-be mothers — no longer believe this nation is worth building a future in.

And who shapes the worldview of young boys? Their mothers. If a mother no longer believes America is home, why would her child grow up ready to defend it?

As Texas goes, so goes America. And as America goes, so goes the free world. If we lose confidence in our own national identity at the same time that we allow separatist enclaves to spread unchecked, the outcome is predictable. Europe is already showing us what comes next: cultural fracture, political radicalization, and the slow death of national unity.

Brandon Bell / Staff | Getty Images

Stand up and tell the truth

America welcomes Muslims. America defends their right to worship freely. A Muslim who loves the Constitution, respects the rule of law, and wants to raise a family in peace is more than welcome in America.

But an Islamist movement that rejects assimilation, builds enclaves governed by its own religious framework, and treats American law as optional is not simply another participant in our melting pot. It is a direct challenge to it. If we refuse to call this problem out out of fear of being called names, we will bear the consequences.

Europe is already feeling those consequences — rising conflict and a political class too paralyzed to admit the obvious. When people feel their culture, safety, and freedoms slipping away, they will follow anyone who promises to defend them. History has shown that over and over again.

Stand up. Speak plainly. Be unafraid. You can practice any faith in this country, but the supremacy of the Constitution and the Judeo-Christian moral framework that shaped it is non-negotiable. It is what guarantees your freedom in the first place.

If you come here and honor that foundation, welcome. If you come here to undermine it, you do not belong here.

Wake up to what is unfolding before the consequences arrive. Because when a nation refuses to say what is true, the truth eventually forces its way in — and by then, it is always too late.

This article originally appeared on TheBlaze.com.