The Bank’s Failure: Pension Funds Across the Globe Lose Millions

The collapse of Silicon Valley Bank (SVB) and Signature Bank has had far-reaching consequences, with pension funds across the globe losing millions of dollars. The California Public Employees Retirement Fund (Cal PERS) had around $67 million invested in SVB and $11 million in Signature, while the California State Teachers' Retirement System (STRS) had $11 million in SVB stock.^[0] The Employee Retirement System of Rhode Island (ERSRI) had just over $2.6 million invested in both banks and two other at-risk banks: First Republic and Silvergate Capital, representing a small percentage of the fund.^[0]

The Bank's failure marks the second-largest bank failure in U.S. history in terms of assets.^[1] It has sparked lawsuits from shareholders alleging executives engaged in fraud, as well as debate over further economic ramifications and what the response of the government should be.^[1] The exact losses aren’t immediately known, but pension system spokesman Dan Minnich said that as of last Wednesday, STRS Ohio held shares of Silicon Valley Bank (SVB) worth $27.2 million.^[2] In response, the Retired Teachers Association continued its criticism of the management of the $90 billion pension system.^[2]

Criticism has been directed towards Becker and other executives of SVB for disposing of $84 million in the bank's stock over the past two years during a period of heightened risk-taking.^[2] In an effort to prevent a panic, the Treasury Department, Federal Reserve, and Federal Deposit Insurance Corporation set up an emergency lending program to insure deposits above the $250,000 maximum-insured level.

North Carolina’s pension fund had invested some $18 million in the two firms, while Rhode Island is expected to lose nearly $2.5 million in pension fund investments.^[3] Federal regulators announced Monday that depositors would have access to their money through an emergency fund at both banks, and President Biden assured that “no losses will be borne by the taxpayers.”^[3]

The collapse of Silicon Valley Bank and Signature Bank has had a wide-reaching impact on pension funds across the world. While the exact losses remain unclear, the federal government has taken steps to prevent a panic and ensure that customers have access to their money. Pension funds have criticized the management of the $90 billion pension system, and the executives at SVB are under investigation for their risk-taking.

0. “Pensions Lose Millions After Bank Collapse” Newsweek, 13 Mar. 2023, https://www.newsweek.com/pensions-lose-millions-after-svb-collapse-1787476

1. “Illinois Municipal Retirement Fund invested in now-collapsed Silicon Valley Bank” Illinois Policy, 15 Mar. 2023, https://www.illinoispolicy.org/illinois-municipal-retirement-fund-invested-in-now-collapsed-silicon-valley-bank

2. “Ohio State Teachers Retirement System Had Massive Investment in Silicon Valley Bank” Cleveland Scene, 15 Mar. 2023, https://www.clevescene.com/news/ohio-state-teachers-retirement-system-had-massive-investment-in-silicon-valley-bank-41599459

3. “SVB collapse: Rhode Island pension fund to lose $2.5 million from bank collapse” Washington Examiner, 13 Mar. 2023, https://www.washingtonexaminer.com/policy/economy/svb-collapse-rhode-island-pension