Silicon Valley Bank's demise began with downgrade threat

IN THE MIDDLE of last week, Service Moody's Investors delivered alarming news to SVB Financial Group, the parent of Silicon Valley Bank: the ratings firm was preparing to downgrade the bank's credit.

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That phone call, described by two people familiar with the situation, began the process toward Friday's spectacular collapse of the startup-focused lender, the biggest bank failure since the 2008 financial crisis.

Friday's collapse sent jitters through global markets and walloped banking stocks. Investors worry that the Federal Reserve's aggressive interest rate increases to fight inflation are exposing vulnerabilities in the financial system.