NEW YORK — The assets of one of Silicon Valley's top banks were seized by regulators on Friday, marking the largest failure of a U.S. financial institution since the height of the financial crisis nearly 15 years ago.

Silicon Valley Bank, the nation's 16th-largest bank, failed this week after depositors rushed to withdraw funds amid concerns about the bank's health. After the failure of Washington Mutual in 2008, it was the second-largest bank failure in US history.

The bank primarily served technology workers and venture capital-backed businesses, including some of the industry's most well-known brands.

Garry Tan, CEO of Y Combinator, a startup incubator that helped launch Dropbox, DoorDash, and Airbnb, as well as referring hundreds of other entrepreneurs to the bank, declared that this was an extinction-level event for startups.

"I have literally been receiving requests for assistance from hundreds of our founders regarding how they can get through this. They are inquiring, "Do I have to lay off my employees?

It seemed unlikely that the chaos would spread to the larger banking industry, as it did in the months preceding the Great Recession. The biggest banks have strong balance sheets and a lot of capital, making them the ones most likely to start an economic collapse.

According to the bank's website, nearly half of the American technology and healthcare businesses that went public last year after receiving early funding from venture capital firms were clients of Silicon Valley Bank.

The bank also bragged about its connections to top technology firms like Shopify, ZipRecruiter, and Andreessen Horowitz, one of the top venture capital firms.

Tan predicted that if they can't get access to their money, nearly one-third of Y Combinator's startups won't be able to pay their employees at some point in the upcoming month.

Roku, an Internet TV provider, was one of the victims of the bank failure. In a regulatory filing on Friday, it stated that $487 million, or about 26% of its cash, was deposited at Silicon Valley Bank.

Roku stated that it was unclear "to what extent" it would be able to recover the deposits it had made with SVB because they were largely uninsured.

The assets of the bank were transferred to a newly founded organization, the Deposit Insurance Bank of Santa Clara, as part of the seizure by California bank regulators and the FDIC. On Monday, the new bank will begin paying out insured deposits. The remaining assets will then be sold by the FDIC and California regulators in order to compensate other depositors.

The banking industry was uneasy the entire week, with shares falling by double digits. Shares of nearly all financial institutions fell even further on Friday after the distress of Silicon Valley Bank was revealed.

The failure came with astonishing speed. On Friday, some market analysts opined that the bank was still a solid business and a wise investment. Executives at Silicon Valley Bank were searching for new investors and raising money at the same time. However, due to extremely high volatility, trading in the bank's shares was suspended prior to the opening bell of the stock market.

The FDIC took action to shut down the bank shortly before noon. Notably, the agency took the initiative instead of waiting until the business was over, as is customary.

An indication of how quickly depositors cashed out was the FDIC's inability to find a buyer for the bank's assets right away. Treasury Secretary Janet Yellen was "watching closely," according to the White House. The administration worked to assuage public fears by pointing out how much healthier the banking system is now than it was before the Great Recession.

"Our banking system is in a fundamentally different place than it was, you know, a decade ago," said Cecilia Rouse, chair of the White House Council of Economic Advisers. The reforms that were implemented at the time actually offer the resilience that we'd like to see.

In 2007, the value of mortgage-backed securities linked to reckless housing loans collapsed, sparking the largest financial crisis since the Great Depression. Lehman Brothers, a company founded in 1847, went out of business as a result of the panic on Wall Street. Major banks had a lot of exposure to one another, which caused the crisis to cause a cascading collapse in the global financial system that rendered millions of people unemployed.

A significant financial link between the tech industry, startups, and workers was Silicon Valley Bank. It was established in 1983 by Bill Biggerstaff and Robert Medearis, and it made use of its Silicon Valley roots to establish itself as a financial pillar in the tech sector. Its total assets stood at $209 billion; it was unclear how many of its deposits exceeded the $250,000 insurance cap, but prior regulatory reports indicated that many accounts did. The bank's shares fell 60% after it announced plans to raise up to $1.75 billion to improve its capital position.

The CEO of TWG Supply in Grapevine, Texas, Bill Tyler, claimed that he first noticed a problem when his staff members failed to receive their paychecks. TWG, a company with only 18 workers, had already sent the funds for the checks to a company that offered payroll services and used Silicon Valley Bank. While his employees were holding out for about $27,000, Tyler was frantically trying to figure out how to pay them. Due to the pandemic and widespread layoffs in the industry, Silicon Valley Bank's ties to the technology industry have only compounded its problems.

Silicon Valley Bank had to sell $21 billion in highly liquid assets to cover the unexpected withdrawals as a result of the Federal Reserve's aggressive interest rate hikes and fight against inflation. FarmboxRx CEO Ashley Tyrner reported that several friends whose companies receive venture capital backing were "beside themselves" about the bank's failure. On Thursday, Tyrner's COO attempted to withdraw money from her business but was unsuccessful.