The External and Internal Causes of SVB’s Collapse and the Role of Regulators

Megan Aldworth Associate Editor Loyola University Chicago School of Law, JD 2023   Silicon Valley Bank (SVB) started in Silicon Valley in 1983 and found a booming growth in tandem with the tech industry and venture capital. At its collapse, which spanned over 48 hours and started on the eve of March 8, it was …
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Senate Enjoys Rare Bipartisan Moment, Seeks to Punish Silicon Valley Bank Executives

n March 17, 2023, following the second-largest bank collapse in U.S. history, President Biden released a statement urging Congress to allow financial regulators to impose tougher penalties on the executives of failed banks. Encouragingly, on March 29–just twelve days later–the Senate proposed bipartisan legislation, dubbed the Failed Bank Executives Clawback Act (FBECA), which would grant the Federal Deposit Insurance Corporation (FDIC) clawback authority to confiscate all or part of the compensation received by bank executives in the five years leading up a bank’s failure.

The Downfall of Cryptocurrency, and Celebrities

Cryptocurrency entered the mainstream economy in 2013 when Forbes listed Bitcoin as the best investment of that year, calling 2013 the “year of the bitcoin.” Then, in 2014, Bloomberg News made the statement that Bitcoin was one of the year’s worst investments. Since these early days, citizens and economists alike have remained skeptical of Bitcoin and other cryptocurrencies. Over the past few years, celebrities have gotten increasingly involved in “pushing cryptocurrency and non-fungible tokens at a speed once reserved for viral dances,” according to the Washington Post. In the wake of recent events, the Securities and Exchange Commission is beginning to crack down on celebrity endorsement that has gone too far.

FDA’s Role in Food Chemical Safety

The U.S. Food and Drug Administration (FDA) protects people from exposure to adverse chemicals in food through the implementation of rigorous regulations. The FDA can do so through the close evaluation of the use of chemicals as food ingredients and the substances that come into contact with food, as well as the broad monitoring of the food supply for chemical contaminants.  This can include the food packaging process, storage process, and other handling measures.

Growing Banking Crisis: Silicon Valley Bank Failure

Founded in 1983, Silicon Valley Bank (SVB) is a midsize California-based lender that shook the foundation of the entire global financial system. Regulators closed SVB on March 10, making it the largest bank failure since the 2008 financial crisis and the second largest in U.S. history. While SVB offered various services from standard checking accounts to loans, it was primarily home to venture capitalists in the tech industry. Therefore, the majority of the corporate deposits were larger than the Federal Deposit Insurance Corporation’s (FDIC) $250,000 insurance limit, leaving over $150 billion in uninsured deposits at the end of 2022. The sudden collapse caused a frenzy leaving companies and investors vulnerable having already experienced mass layoffs in the tech industry.

The East Palestine Train Derailment

Earlier this month, an environmental disaster caused by a train derailment in a west Ohio town has resulted in close scrutiny from the Environmental Protection Agency (EPA). On February 3, 2023, a Norfolk Southern freight train derailed in East Palestine, Ohio, resulting in a chemical spill of millions of liters of toxic liquids. Among the spill’s immediate effects were chemical leakage into local water supplies and air pollution originating from a controlled burn. The EPA has since stepped in to hold Norfolk Southern accountable for the clean-up, but unanswered compliance questions still remain.

The Role of Regulators During the Collapse of Silicon Valley Bank

On March 10th, 2023, Silicon Valley Bank (SVB) collapsed practically overnight, followed only two days later by the collapse of Signature Bank.  Prior to its collapse, SVB uniquely served a single category of customers – start-ups.  As the largest bank failure since the 2008 financial crisis, SVB’s bankruptcy resulted in significant consequences for the tech industry.  While SVB has since been acquired by First Citizens BancShares, the House Financial Services Committee is currently seeking answers from both regulators and SVB executives about how such a failure could have occurred and how to prevent it from happening again.

Secret Shoppers Not Just in Stores: Use of Secret Shopping in Higher Education

Federal Student Aid (FSA), and the office of the Department of Education, announced on March 14th their plans to better monitor and enforce universities’ practices such as enrollment and the use of federal student aid to ensure that all regulations are being complied with. Secret shopping is used by enforcement agencies to scope out violations and get a better idea of how organizations, institutions or businesses are non-compliant with regulations. FSA hopes that this plan will incentivize universities to follow procedures and policies accordingly and will help determine which schools are being predatory by not complying with regulations. The main goal of sending out secret shoppers is to protect current and future students from harmful and predatory practices that are prohibited.

TikTok’s Time is Ticking

TikTok is making American headlines once again. Calls to ban the app have been revived by groups of bipartisan legislators. President Biden has threatened to ban TikTok from American digital markets over concerns for how the social media app handles domestic data. Former President Donald Trump attempted to ban the app in the US in 2020, but the ban was ultimately unsuccessful. However, pundits continue to debate whether regulators, legislators, or the President have the power to enforce a TikTok ban

Equitable Offerings: Patient Access to Electronic Health Information

In 2014, the Centers for Medicare and Medicaid Services and the Electronic Health Record Incentive Programs set guidelines requiring all eligible and participating hospitals and providers to offer certified technology that would give patients access to their electronic health information (EHI). By 2020, 57% of the population reported being offered access to their EHI via portal by their healthcare provider, which constitutes a 24% increase since it was first required. However, recent studies have found that there are disparities in who is being offered access to the EHI, specifically in the Black and Hispanic communities. These disparities must be addressed to promote improved health for the general population and health equity.