On Sunday, U.S. authorities said they would ensure depositors with money at Silicon Valley Bank, a California-based banking institution used by many tech startups that collapsed Friday, would be paid back in full. Depositors were told they could start accessing their money this morning, the New York Times reports. Many tech startups said they wouldn’t have enough money for payroll this week without access to their funds.

While the federal government’s intervention is rare, the situation is different than in the 2008-09 financial crisis, NPR explained in it’s “Up First” podcast this morning. The U.S. rescue plan involves tapping a deep reserve of bank-funded federal insurance money, not taxpayer dollars, according to officials.

Signature Bank was the second casualty of the ongoing banking crisis, TechCrunch reported. The financial institution provided banking services to real estate companies and law firms but also cryptocurrency companies — around 30% of the bank’s deposits came from the crypto industry.

Here are a few reads to catch you up on the news and provide analysis:

Why did SVB fail: Silicon Valley Bank’s collapse followed a tumultuous few days, including a botched capital call and a rush of depositors withdrawing their funds, Business Insider reports. “SVB’s actions in the last week, where it surprised the market with a planned capital raise which later failed, are partly to blame. Venture capitalists imploring the founders to pull money from the bank certainly didn’t help,” Business Insider reported.

FDIC background and how it’s affected by the federal government’s decision: What is the bank-funded federal insurance money being used to ensure Silicon Valley Bank customers get their deposits back? The Federal Deposit Insurance Corp. is an independent agency of the U.S. government that protects bank depositors against the loss of their insured deposits in the event that an FDIC-insured bank or savings association fails.

Federal insurance covers accounts up to $250,000, but more than 90% of SVB’s deposits were above that cap, which is why the federal government is waiving the ceiling. Signature Bank’s customers are also protected by the federal government’s provision to waive the $250,000 ceiling, the Wall Street Journal reported.

Read more about the FDIC and how it functions.

Bank stocks: Biden said his administration’s rapid action over the weekend should give Americans confidence that the U.S. banking system is safe, adding that he was going to ask Congress and regulators to strengthen bank rules, but banks were still shaky in the markets, Reuters reported. The Wall Street Journal has live updates on the markets.

Here’s a look at how stocks of Iowa’s publicly held banks are faring. Listings are shown as: price, change, percentage change:
Ames National Corp. (ATLO): 22.01, -0.77, -3.38%
Heartland Financial USA Inc. (HTLF): 40.07, -4.55, -10.20%
MidWest One Financial Group Inc. (MOFG): 24.42, -2.48, -9.22%
QCR Holdings Inc. (QCRH): 42.79, -3.49, -7.55%
West Bancorporation Inc. (WTBA): 18.42, -0.63, -3.31%
As of 9:24 a.m.

Startups react: Startups began acting quickly over the weekend when the future of their SVB deposits beyond the federally insured $250,000 was uncertain, PitchBook reports.

Chris Farmer, founder of venture firm SignalFire, told PitchBook that about six of his firm’s portfolio companies wouldn’t be able to make the next payroll if they couldn’t get access to their SVB accounts. “We were prepared for lots of contingencies, including total disasters, but we didn’t pull the trigger on them,” Farmer said. “I had a feeling that we would get a resolution.”

Popular brands like Roku, Roblox and Etsy were among those affected, Yahoo reported.

What could happen next: President Joe Biden addressed the bank failures this morning, saying Americans should “rest assured” that his administration has acted to ease uncertainties about the banking system, NBC reported. He said he told his team to protect people who run small businesses and he detailed actions that were taken to protect customers’ deposits and to hold those responsible accountable.

Despite assurances, former FDIC chair warns more failures could happen: Despite assurances from Treasury Secretary Janet Yellen that the American banking system is really safe and well-capitalized, former FDIC chair William Isaac is warning that more bank failures could be looming, Yahoo Finance reports. “How many more? I don’t know. How big? I don’t know. Seems a lot like the 1980s,” Isaac said.

Goldman Sachs’ analysts on Sunday said they no longer expect the U.S. Federal Reserve to deliver a rate hike at its March 22 meeting with considerable uncertainty about the path beyond March, in light of the recent stress in the banking sector, Reuters reported.

The Business Record will keep readers up to date on developments and will provide analysis of implications in Iowa.