News of the impending failure of Silicon Valley Bank (SVB) did not worry Biden Administration officials at first, but they quickly sprang into action when they determined that it could cause an economic crisis, The New York Times reported.

Officials reconsidered after seeing signs of bank runs across the country, and direct appeals from potentially affected parties and lawmakers convinced them of the potential of something unseen since the 2008 financial crisis.

The Times explained that SVB failed because it had put a large share of deposits into bonds that would yield modest, steady returns when interest rates were low. But when the Federal Reserve increased interest rates in response to inflation, from near zero to above 4.5 percent during the past year, the value of those bonds decreased, to the point where the bank essentially ran out of funds.

On Thursday, March 9, Federal Reserve officials, including Chair Jerome Powell, worked through the night and into the next morning to try to avoid a collapse and a systemic risk to the financial system. A loan through the central bank’s “discount window” would not be enough to stave off a collapse, they determined. They also tried to arrange a quick sale to another bank in order to keep depositors whole. One notable regional institution, PNC, backed off when it could not get the government to assure it that it would be insulated from risks.

On Friday morning, warning signs were growing. That afternoon, JPMorgan Chase & Company CEO Jamie Dimon told Deputy Treasury Secretary Wally Adeyemo that there was “potential” that SVB’s failure could lead to a threat to the entire financial system.

The previous evening, Adeyamo attended a dinner hosted by Peter Orszag, former President Obama’s first budget director and now chief executive of financial advisory at the bank Lazard. He spoke with Blair Effron, co-founder and partner of independent investment banking and advisory firm Centerview Partners, who was advising SVB, and both realized that a sale of SVB or a bigger intervention was needed.

Around that time, President Joe Biden’s chief of staff, Jeffrey Zients, and National Economic Council Chair Lael Brainard had begun receiving a “flurry of calls and texts” from SVB clients in the start-up community. They told the president about their concerns about a new crisis.

Worries about perception abounded, too. It could appear that wealthy investors were being “bailed out” by the government, which could encourage other banks that mismanaged their risk to continue their risky behavior.

On Saturday, Gov. Gavin Newsom of California asked the president for government intervention, fearing that state employers would otherwise not be able to pay employees or other operational costs on Monday morning.

As regulators reviewed data that showed deposit outflows increasing at regional banks nationwide, a likely sign of systemic risk, they pursued the options of either finding a buyer for the bank or seeking  a “systemic risk exception” that would allow the Federal Deposit Insurance Corp. (FDIC) to insure all of the bank’s deposits.

By Saturday evening, officials from the Department of the Treasury, the White House and the Federal Reserve tentatively agreed that the government would ensure that all depositors would be repaid in full, and the Fed would offer a program providing attractive loans to other financial institutions in hopes of avoid a series of bank failures.

But the rescue had limits. To avoid the perception of a bailout, the depositors would be protected, but the bank’s management and its investors would not.

By Sunday evening, all depositors at Silicon Valley Bank were repaid in full. So were those at New York-based Signature Bank, which failed over the weekend. The Federal Reserve also said it would offer banks loans against their Treasury and many other asset holdings, whose values had eroded.

The markets slowly rebounded and outflows from regional banks also slowed on Monday. While the financial system stabilized somewhat, the Times also reported that the values of shares of U.S. regional banks have been declining, and that shares in Credit Suisse hit a record low on Wednesday, March 15.