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NEW YORK (AP) — Regulators rushed Friday to seize the assets of one of Silicon Valley’s top banks, marking the largest bankruptcy of a U.S. financial institution since the height of the financial crisis nearly 15 years ago.

Silicon Valley Bank, the country’s 16th largest bank, filed for bankruptcy after depositors rushed to withdraw money this week amid concerns about the bank’s health. It was the second largest bank failure in US history after the collapse of Washington Mutual in 2008.

The bank mainly served technology workers and venture backed companies, including some of the industry’s best-known brands.

“This is a dying event for startups,” said Garry Tan, CEO of Y Combinator, a startup incubator that launched Airbnb, DoorDash and Dropbox and has referred hundreds of entrepreneurs to the bank.

“I have literally heard from hundreds of our founders asking for help on how to get through this. They ask, ‘Should I fire my employees?’”

There seemed little chance of the chaos spreading to the wider banking sector as it had in the months leading up to the Great Recession. The largest banks – most likely to trigger an economic collapse – have healthy balance sheets and ample capital.

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

The bank also boasted of its connections with leading technology companies such as Shopify, ZipRecruiter and one of the largest venture capital firms, Andreesson Horowitz.

Tan estimated that nearly a third of Y Combinator’s startups will be unable to pay payroll at some point in the next month if they don’t have access to their funds.

Internet TV provider Roku was one of the victims of the bank collapse. It said in a regulatory filing on Friday that about 26% of its cash — $487 million — was deposited with Silicon Valley Bank.

Roku said its deposits with SVB were largely uninsured and it did not know “to what extent” it could recover them.

As part of the seizure, California banking regulators and the FDIC transferred the bank’s assets to a newly created institution: the Deposit Insurance Bank of Santa Clara. The new bank will start paying out insured deposits on Monday. Next, FDIC and California regulators plan to sell off the rest of the assets to make other savers healthy.

The banking sector was in turmoil all week, with stocks plummeting by double digits. Then news of the ailing Silicon Valley Bank sent shares of nearly all financial institutions falling even further on Friday.

The breakdown came with incredible speed. Some industry analysts suggested on Friday that the bank was still a good company and a wise investment. Meanwhile, Silicon Valley Bank executives scrambled to raise capital and find additional investors. However, trading in the bank’s stock was halted before the stock market’s opening bell due to extreme volatility.

Shortly before noon, the FDIC proceeded to close the bank. In particular, the agency did not wait until the end of the work day, which is the typical approach. The FDIC was unable to immediately find a buyer for the bank’s assets, indicating how quickly depositors paid out.

The White House said Treasury Secretary Janet Yellen was “watching closely.” The government tried to reassure the public that the banking system is much healthier than it was during the Great Recession.

“Our banking system is in a fundamentally different place than it was a decade ago,” said Cecilia Rouse, president of the White House Council of Economic Advisers. “The reforms that were put in place at the time really provide the kind of resilience that we would like to see.”

In 2007, the biggest financial crisis since the Great Depression rippled around the world after mortgage-backed securities tied to ill-advised home loans plunged in value. The panic on Wall Street led to the demise of Lehman Brothers, a company founded in 1847. Because big banks had a lot to do with each other, the crisis led to a cascading collapse of the global financial system, leaving millions out of work.

At the time of the failure, Silicon Valley Bank, based in Santa Clara, California, had total assets of $209 billion, according to the FDIC. It was unclear how many of his deposits were above the $250,000 insurance limit, but previous regulatory reports showed that many accounts exceeded that amount.

The bank announced plans on Thursday to raise up to $1.75 billion to strengthen its capital position. That caused investors to rush and the stock plummeted by 60%. They tumbled even lower Friday before the open on the Nasdaq, where the bank’s shares traded.

As the name implies, Silicon Valley Bank was an important financial conduit between the technology sector, startups and tech workers. It was seen as good business sense to build a relationship with the bank if a startup founder wanted to find new investors or go public.

The bank was conceived in 1983 by co-founders Bill Biggerstaff and Robert Medearis during a poker game and leveraged its Silicon Valley roots to become a financial cornerstone in the technology industry.

Bill Tyler, the CEO of TWG Supply in Grapevine, Texas, said he first realized something was wrong when his employees texted him at 6:30 a.m. Friday to complain that they hadn’t received their paychecks.

TWG, which has only 18 employees, had already sent the money for the checks to a payroll service provider that used Silicon Valley Bank. Tyler struggled to figure out how to pay his workers.

“We’re waiting for about $27,000,” he said. “It is already not timely payment. It’s already an awkward position. I don’t want to ask employees to say, ‘Hey, can you wait until the middle of next week to get paid?’”

Silicon Valley Bank’s ties to the technology sector added to the problems. Technology stocks have been hit hard over the past 18 months after booming during the pandemic, and layoffs have spread throughout the industry. Venture capital financing has also declined.

At the same time, the bank was hit hard by the Federal Reserve’s fight against inflation and an aggressive series of rate hikes to cool the economy.

As the Fed raises its benchmark rate, the value of generally stable bonds begins to decline. That’s not usually a problem, but when savers get anxious and start withdrawing their money, banks sometimes have to sell those bonds before they mature to cover the exodus.

That’s exactly what happened with Silicon Valley Bank, which had to sell $21 billion in highly liquid assets to cover the sudden withdrawals. It took a $1.8 billion loss on that sale.

Ashley Tyrner, CEO of FarmboxRx, said she spoke to several friends whose companies are backed by venture capital. She described them as “beside themselves” about the bank’s bankruptcy. Tyrner’s chief operating officer attempted to withdraw her company’s cash on Thursday, but failed to do so in time.

“A friend said they couldn’t make the payroll today and cried when they had to inform 200 employees because of this problem,” Tyrner said.

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Associated Press writers Michael Liedtke, Cora Lewis and Matt O’Brien, Frank Bajak and Barbara Ortutay contributed to this story.