2023: SVB, Signature, First Republic

Between March 10 and May 1, 2023, three U.S. banks with combined assets greater than the total of all U.S. bank failures of the 2008-2009 crisis were taken into FDIC receivership: Silicon Valley Bank (March 10), Signature Bank (March 12), and First Republic Bank (May 1). The episode triggered the systemic-risk exception under the Federal Deposit Insurance Act for the first time since 2008, reshaped supervisory expectations for mid-size U.S. banks, and produced the largest call on the Deposit Insurance Fund in over a decade. It also revealed dynamics — the speed of social-media-driven deposit runs, the interest-rate risk embedded in long-duration securities portfolios, the concentration of uninsured deposits at some institutions — that the post-2008 framework had not been designed for.

This article describes the sequence of the failures, the underlying dynamics, the regulatory response, and what remains unresolved as of mid-2026. For the broader post-2008 framework, see 2008, from a retail bank lens; for the standard bank-failure resolution process, see bank failures and resolution.

Silicon Valley Bank

SVB was a $209 billion mid-size California-chartered state bank focused on the venture-capital and technology-startup ecosystem. Its deposits — overwhelmingly business deposits from VC firms and startups — were heavily concentrated in accounts well above the $250,000 FDIC insurance limit; the bank's call reports indicated that more than 90% of its domestic deposits were uninsured at the time of failure.

The bank had invested a substantial share of its deposit base in long-duration U.S. Treasury and agency mortgage-backed securities purchased during the 2020-2021 low-rate period. By early 2023, the rapid Federal Reserve rate increases had produced unrealized losses on those securities of approximately $15 billion — losses the bank did not need to recognize on its income statement because the securities were classified as "held to maturity" under accounting rules, but losses that were nonetheless real economic facts.

On March 8, 2023, SVB announced a $1.75 billion equity raise and the sale of $21 billion of securities at a realized loss of $1.8 billion, intended to restructure the balance sheet. The announcement triggered concern among the bank's depositor base, which was unusually concentrated, sophisticated, and well-networked. Over the following 36 hours, depositors attempted to withdraw approximately $42 billion — about 25% of the bank's deposit base — on March 9. The California Department of Financial Protection and Innovation closed SVB on the morning of March 10 and appointed the FDIC as receiver.

The speed of the run was unprecedented in U.S. banking history. The deposits did not leave through teller lines but through online and mobile banking; the bank's depositors coordinated their withdrawals through group chats and social media in a way the post-2008 regulatory framework had not anticipated. The dynamic was named the first "social media-driven bank run" by subsequent regulatory analysis.

Signature Bank

Signature Bank, a $110 billion New York-chartered bank with substantial exposure to the digital-asset and cryptocurrency industry, failed two days later on March 12. The failure was not driven by the same securities-loss dynamic as SVB; Signature's deposit base was differently composed, with concentration in cryptocurrency-firm operating accounts. The closure was prompt and was made in coordination with the SVB resolution.

Signature's resolution was complicated by the digital-asset deposit exposure; the FDIC excluded the digital-asset business line from the eventual sale to a successor bank (New York Community Bancorp's subsidiary Flagstar), with that portion of the deposits going through a separate wind-down.

The systemic-risk exception

On Sunday, March 12, 2023, the FDIC, Federal Reserve, and Treasury jointly announced that the systemic-risk exception under Section 13(c)(4)(G) of the Federal Deposit Insurance Act would be invoked for the SVB and Signature resolutions. The invocation extended FDIC coverage to all depositors at both institutions, including the substantial uninsured-deposit balances. The stated reasoning was that allowing uninsured-deposit losses at these banks would create unacceptable systemic risk by triggering broader deposit flight from other mid-size banks.

The systemic-risk exception requires concurrence of two-thirds of the FDIC Board, two-thirds of the Federal Reserve Board, and the Treasury Secretary in consultation with the President. The Sunday-evening invocation was the first since 2008-2009 and was conducted on an emergency basis over the weekend before financial markets opened Monday morning.

The Federal Reserve simultaneously announced the Bank Term Funding Program, a new emergency facility that allowed banks to borrow against high-quality securities at par (not at the depressed market value), providing a substantial liquidity backstop that addressed the specific interest-rate-loss issue that had been the proximate trigger for SVB. The BTFP operated through March 2024 and provided over $160 billion of advances at its peak.

First Republic Bank

First Republic Bank, a $213 billion San Francisco-based bank with a private-banking focus and a substantial residential mortgage portfolio, came under deposit-run pressure in the weeks following the SVB and Signature failures. Eleven of the largest U.S. banks deposited a combined $30 billion at First Republic in mid-March as a vote of confidence; the deposits were not enough to stem the outflow. The bank's deposit base, while less concentrated than SVB's, was substantially uninsured.

The FDIC closed First Republic on May 1, 2023, and immediately resold the bank to JPMorgan Chase in a purchase-and-assumption transaction. The First Republic resolution did not use the systemic-risk exception; JPMorgan absorbed both insured and uninsured deposits as part of the P&A, with the FDIC's cost-sharing arrangement structured to make the transaction attractive without requiring the exception. The decision not to invoke the exception for First Republic was a deliberate signal from the regulators that the exception was not becoming the new normal.

The supervisory response

The Federal Reserve issued a self-assessment report in April 2023 (the "Barr Report" after Vice Chair for Supervision Michael Barr) acknowledging supervisory failures at SVB and recommending substantial changes to the supervisory framework for mid-size banks. The FDIC issued a parallel review of its supervision of Signature. The reports identified multiple specific supervisory failings (delayed action on identified risks, insufficient attention to interest-rate risk and concentrated deposit bases) and recommended a substantial overhaul of mid-size bank supervision.

The post-2023 supervisory changes have included:

• Heightened supervisory attention to interest-rate risk and unrealized losses in available-for-sale and held-to-maturity securities portfolios.
• New attention to deposit concentration and the risk profile of uninsured deposits.
• Proposed changes to liquidity requirements at mid-size banks, including potential extension of LCR-style requirements to a broader range of institutions.
• Special FDIC assessment on banks above $5 billion in uninsured deposits to recapitalize the Deposit Insurance Fund after the 2023 resolutions.
• Ongoing debate over whether to raise the standard $250,000 insurance limit or create a separate higher limit for business operating accounts. No legislative change has been enacted as of this writing.

What remains unresolved

Several substantive questions raised by the 2023 episode remain open. The appropriate insurance limit for business operating accounts (where the $250,000 limit is much more constraining than for consumer accounts) has been the subject of legislative proposals but no enacted change. The interaction of social-media-driven deposit dynamics with traditional bank supervision and capital requirements continues to be analyzed. The conditions under which the systemic-risk exception will or will not be invoked at future failures remain a matter of regulatory discretion, with the 2023 invocations having produced commentary in both directions about whether the bar has been lowered.

For consumer depositors with balances within the $250,000 per-ownership-category limit at insured banks, the 2023 episode produced no changes — the standard insurance covered them as it always has. For uninsured-balance depositors, the picture is more nuanced: the systemic-risk exception was used in two of the three 2023 failures but not the third, and policy commentary has emphasized that it should not be expected as standard treatment.

Limits and uncertainty

The 2023 episode is recent enough that its full policy implications are still emerging. The Barr Report's recommendations are being implemented in stages; further rulemaking and supervisory changes are likely over the next several years. The deposit-insurance-limit debate is unresolved. The interaction of social-media dynamics with bank supervision is being analyzed. The basic policy posture — that the systemic-risk exception is available but not routine, that mid-size bank supervision is being tightened, and that uninsured-deposit concentration is a supervisory concern — is durable as of 2026.