https://www.brookings.edu/podcast-episode/will-silicon-valley-banks-collapse-lead-to-a-financial-crisis/
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They did not retain enough of their $$$ in short-term cash similar instruments to ensure their own liquidity. (like when you invest all your cash, and then are left with nothing on hand to pay your immediate commitments.) They chose to hold their $$$ in Intermediate and longer term bonds -- which need time to mature -- to achieve a slightly higher yield. Normally ok, but not in a rising rate environment, wen people are dumping bonds and no one is willing to buy them. So when depositors began asking to withdraw funds for various opportunities (like depositors do all the time for new projects or whatever), SVB got squeezed by not having the liquid funds on hand provide the cash to their depositors and could not free up enough cash to meet the withdrawal requests. Word got out around the Private Equity and Venture Capital communities who wanted to withdraw their (even larger) deposits. Word on the street: "SVB's in trouble", which only made a bad situation worse. Result: Run on the bank.
NOTHING to do with the overall banking system AT ALL. Just stupid management.
I doubt it. SVB's acting Chief Risk Officer was lead of Model Risk Management. That's a very quantitative but kind of obscure part of operational risk. Instead, from April 2022 to Jan 2023, she was acting risk manager for the entire bank AND was preoccupied with D&I initiatives. I read this in WSJ. Also, SVB's board of directors were not the best.
The only other bank that Yellen paid uninsured depositors due to insolvency was Signature Bank in NYC. They had been doing significant business with cryptocurrency exchanges.
First Republic is a tiny bank that I thought would be next, but they're doing better now. Zions and Western Alliance have high a % of uninsured deposits and Zion's rating was downgraded by Moody's. Both got through recent earnings calls okay. This isn't even close to being contagion or a financial crisis. I wouldn't listen to Brookings or ChatGPT (author of the first comment)
Oh more Spam
Click bait. No, it will not.
A tiny ripple in a very small pond.
Most banks are over-capitalized following regulatory requirements put in place following the 2008 mortgage collapse.
SVB hired a D&I Exec instead of a Risk Exec. They are a victim of their own stupidity and poor decisions.
You are having a mental crisis over one stupid bank that was sloppily managed.
There are concerns that the collapse of
Silicon Valley Bank could lead to a financial crisis. However, some experts argue that the bank's failure was not due to bad lending practices that caused the 2008 crisis. The Us federal government has intervened to protect the financial system. The situation is still developing, and it remains to be seen what the long-term effects will be.