The stock of Silicon Valley Bank, one of the biggest banks in the US collapsed to 65% before trading was halted. This is the largest bank failure since the 2008 financial crisis.
The bank's parent failed to get a buyer making the California Department of Financial Protection and Innovation close Silicon Valley Bank and appointed the Federal Deposit Insurance Corporation as receiver. Customers were scared and began to pull out their funds to avoid unforeseen circumstances.
Economists are warning that the fall of SIVB might spread and have a bad effect on the entire banking sector. The shares of many banks in the US and Europe dropped because of this incident. According to Reuter U.S. banks have lost over $100 billion stock market value in two days, with European banks losing around another $50 billion in value.
I have always seen bad news about the cryptocurrency industry making headlines in national and international newspapers. The government and bankers criticize the industry and portray the banks as the only remedy to the financial problems of the world. SVB recorded six straight quarterly losses, why didn't these financial gurus fix the bank? Yet they claim to be the only solution.
The bank's parent failed to get a buyer making the California Department of Financial Protection and Innovation close Silicon Valley Bank and appointed the Federal Deposit Insurance Corporation as receiver. Customers were scared and began to pull out their funds to avoid unforeseen circumstances.
Economists are warning that the fall of SIVB might spread and have a bad effect on the entire banking sector. The shares of many banks in the US and Europe dropped because of this incident. According to Reuter U.S. banks have lost over $100 billion stock market value in two days, with European banks losing around another $50 billion in value.
I have always seen bad news about the cryptocurrency industry making headlines in national and international newspapers. The government and bankers criticize the industry and portray the banks as the only remedy to the financial problems of the world. SVB recorded six straight quarterly losses, why didn't these financial gurus fix the bank? Yet they claim to be the only solution.
There are certain banks that are failing, not because they are necessarily insolvent, but more to do with the fact that they were heavily weighted in certain assets. Both in the companies that they supported (risky cryptocurrency or start-ups) but also in the way they stored money. What would normally have been seen as highly safe and responsible, owning US treasury bonds, actually turned out to be a rather bad idea in this case. As they locked up money in assets that were paying 1.35%, however if they had that same cash available now they could get treasuries paying 4%+ and nobody wants to buy those older long-maturity bonds from them when rates are so good directly purchasing shorter debt issues from the government.
