the justice department is investigating the collapse of california-based Silicon Valley Bank taken over by federal Regulators Friday after depositors made a run on the bank rushing to pull their money out government officials transferred all of svb's deposits to a newly created Silicon Valley Bridge bank making customers money available immediately but the impact has shaken up the tech companies that were largely using that bank for the foreseeable future including many located right here in New Jersey senior correspondent Joanna gagas reports on the Fallout over the weekend we weren't sure what access we would have to our Capital we weren't sure how much of our Capital we would eventually get back Steven sokoloff compared watching the Silicon Valley Bank collapse this weekend to weathering a storm that hit hard and fast threatening to upend the tech sector entirely that's relied almost solely on the bank Services Silicon Valley Bank is been our banking partner for many years they've been a great you know really well distinguished Bank serving the Venture Community but like so many new jersey-based Venture capitalists Tech Council Ventures had all of its funds in Silicon Valley Bank and when Rumblings began that the decades-old bank was in financial trouble many companies withdrew their funds leading to the collapse Swift response from the FDIC this weekend ensured the funds for depositors stemming the shockwaves reverberating from California all the way here to New Jersey we've seen the effects Ripple really throughout the the state um you know startups were especially last week and Friday very concerned about their their deposits and concern about their ability to make payroll to pay their rent and so those that heard that the FDIC would make good on the FDIC insurance and pay out on Monday were relieved quickly and then with the the federal announcement to make good on the deposits overall people are feeling much more comfortable now I think it's very important that the FDIC has come in to reassure the depositors to guarantee their accounts because otherwise there really is kind of a no telling what would happen to the whole startup ecosystem in the country this weekend Governor Murphy and New Jersey's Economic Development Authority also stepped up to provide emergency assistance for New Jersey companies experiencing liquidity issues reopening the entrepreneur support program and launching an angel match program by offering this Suite of programs for New Jersey entrepreneurs impacted by SVP and signature we will continue to keep residents employed and support companies that are vital to our Innovation ecosystem I think it's important as well on the state level that but uh you know the New Jersey state has set up this entrepreneurship program as well as the angel program to kind of help facilitate some of the hurdles that will be presented and have yet to play out in terms of where that money is going to have hiccups and where some of the companies will have to make up for the switching costs of banks that will likely come in the next month or so but all might not be lost for Silicon Valley Bank as the FDIC which is now at the helm sent out communication to svb clients today urging them to reinvest in the bank sokolov's money is still there and while he's considering leaving it there he's also focused on preventing this type of risk in the future certainly there's a lot of body movement we've set up accounts elsewhere I'm not sure anyone's ever going to leave all their money in one place anymore in the future I think you'll see um a shake up in the banking industry and their ability to focus in one particular sector because it was a few too many eggs perhaps in one basket I think you'll see people think about diversifying their their cash deposits across many banks and those that may not have such a deep sector Focus Economic Policy analyst Krista Brown believes keeping smaller Banks alive is critical to reducing the monopolization of the banking industry as long as the way that Silicon Valley Bank is restructured is kind of met with the same regulations that were taken away in 2018 which under the Trump Administration there was a lot of deregulation from what happened with Dodd-Frank where Banks under uh 250 billion were no longer acquired for certain stress testing and that has likely led to a lot of what we see today with these bank failures the Department of Justice launched an investigation today to uncover all the factors that led to the collapse I'm Joanna Gagis NJ Spotlight news [Music] [Music]