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In mad dash, Mass. customers pull money out of failed Silicon Valley Bank
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More than two dozen customers lined up outside Silicon Valley Bank’s Wellesley office Monday, waiting hours to withdraw their money from the failed institution after regulators pledged to make all the funds available.
Vanessa Calderón-Rosado was among them. She’s chief executive of IBA Boston, a nonprofit that helps people with affordable housing and other services. She said she stood in line for two hours but was successful.
“We were able to withdraw all of the money that we had in our account with them,” she said. “It was a great relief.”
The California-based bank, with five branches in Massachusetts, was closed by regulators Friday, sending shockwaves through the financial world. On Sunday night, the U.S. Treasury and other federal regulators announced they would allow customers to access all of their money, not just the FDIC-insured amount.
The emerging picture of those exposed to the bank’s collapse is broader than its technology-sector reputation. The $209 billion bank, the second-largest to fail in U.S. history, had a much wider reach, thanks in large part to its acquisition of Boston Private Bank & Trust Co. in 2021. That deal brought in relationships with community development groups, small businesses, social service nonprofits and a long list of charter schools.
“So much of the focus in the last 72 hours has been on the tech sector,” said Kimberly Lyle, chief executive at the Dorchester Bay Economic Development Corp., an affordable housing developer. “The reality is that Silicon Valley Bank had loaned money to housing projects in California, in Massachusetts.”
She said the bank also made grants to small community organizations that had come to rely on that assistance.
Like other managers of nonprofits contacted by WBUR, Lyle said her group’s relationship had started with Boston Private Bank. Even though customers like her are relieved that federal regulators stepped in to make customers whole, they also are concerned about the future.
“Bank failure is seldom a solitary affliction. It tends to be a contagious thing. So I think people want to make sure they don't have any uninsured deposits anywhere.”
Kevin Murray
Kevin Murray, interim executive director of the Massachusetts Association of Community Development Corporations, said his group held a virtual meeting Monday morning to talk over the concerns of its 63 members, which include nonprofits in housing and neighborhood services. Several could not attend, he said, because they were working on getting their money out of Silicon Valley Bank and moving it elsewhere.
“Bank failure is seldom a solitary affliction,” Murray said. “It tends to be a contagious thing. So I think people want to make sure they don't have any uninsured deposits anywhere.”
Together, the members have millions of dollars of business with Silicon Valley Bank. And they are just a fraction of the many nonprofits affected by the collapse of a bank best known for catering to high-tech startups and venture capitalists.
Many groups are taking a hard look at where they keep their funds, and ensuring they spread their cash around to a number of banks, since accounts are insured only up to $250,000.
Owen Stearns, chief executive of Excel Academy Charter School, which runs four schools in East Boston, Chelsea and Rhode Island, said the group was fortunate that not all its money was locked up with Silicon Valley Bank. But it was still scary. On Monday he and his staff were working to move about $1 million to other institutions.
At least a dozen charter schools in the area did business with Silicon Valley Bank, according to a spokesman for the Massachusetts Charter Public School Association. In addition to deposit accounts, many have real estate loans and other lines of credit with the bank.
Some schools were in dire straits over the weekend, Stearns said, worried about making payroll before the feds stepped in to pledge access to funds.
Stearns said schools are consulting their lawyers to understand the terms of their loans and whether they are protected if regulators are successful in finding a buyer for the bank.
“We’re all right now on a very steep learning curve,” Stearns said. “We’re doing our best to get smarter, diversifying, putting money in safer instruments. You know, at the end of the day, kids are impacted by all of this — how this money flows and whether we have access to it.”
Jacqueline Reis, a spokeswoman for the state Department of Elementary and Secondary Education, in a statement said staff had been in touch with charter schools since Friday.
“At this point, it looks like they will receive the federal funding before any problems arise, but we continue to check in with the schools in case of any difficulty,” she said.
President Biden in public remarks sought to calm the waters Monday , after a week in which three banks failed, including another in California and one in New York. And some Massachusetts institutions sent emails to customers, assuring them that the banking system remains solid.
But worries about bank safety had certainly crept into the thinking of many business people in Greater Boston by Monday. A big fear is that whatever bank acquires the failed bank, will be even bigger and won’t be the trusted lender they had in Boston Private.
Many customers are still anxiously waiting to receive all their cash. Jonathan Levine, chief executive of Folia Materials, a Bedford-based startup, said he could not access the Silicon Valley Bank app or get into the account through the website on Monday.
"I’m not panicking, but if two days from now they haven’t figured out some of the administration I’m gonna start worrying," he said.
This segment aired on March 14, 2023.
