The failure of Silicon Valley Bank (SVB) in March 2023 triggered a banking panic in the United States, becoming the second-largest bank failure in US history. SVB's failure was unique due to its high percentage of uninsured deposits, which made it vulnerable to a bank run. The bank's balance sheet was heavily weighted toward long-term securities, which lost value as interest rates rose. This, combined with a lack of deposit insurance for most of its deposits, led to a rapid withdrawal of funds by depositors. The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve responded with emergency measures, including the use of a systemic risk exception and a new emergency lending program, to prevent further bank failures. The panic spread to other banks, including Signature Bank and First Republic Bank, leading to a broader banking crisis. The failure of SVB highlighted the risks of high levels of uninsured deposits and the importance of effective bank regulation and supervision. The incident also raised questions about the adequacy of deposit insurance and the need for better risk management practices in the banking sector. The regulatory response demonstrated the challenges of managing systemic risk and the importance of maintaining public confidence in the banking system. The SVB crisis underscores the need for a balanced approach to financial regulation that addresses both risk and stability in the banking sector.The failure of Silicon Valley Bank (SVB) in March 2023 triggered a banking panic in the United States, becoming the second-largest bank failure in US history. SVB's failure was unique due to its high percentage of uninsured deposits, which made it vulnerable to a bank run. The bank's balance sheet was heavily weighted toward long-term securities, which lost value as interest rates rose. This, combined with a lack of deposit insurance for most of its deposits, led to a rapid withdrawal of funds by depositors. The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve responded with emergency measures, including the use of a systemic risk exception and a new emergency lending program, to prevent further bank failures. The panic spread to other banks, including Signature Bank and First Republic Bank, leading to a broader banking crisis. The failure of SVB highlighted the risks of high levels of uninsured deposits and the importance of effective bank regulation and supervision. The incident also raised questions about the adequacy of deposit insurance and the need for better risk management practices in the banking sector. The regulatory response demonstrated the challenges of managing systemic risk and the importance of maintaining public confidence in the banking system. The SVB crisis underscores the need for a balanced approach to financial regulation that addresses both risk and stability in the banking sector.