Failure of Silicon Valley Bank and two other banks has thrown financial markets into their worst state of panic since 2008. Read more
Tech was a good place to be for much of the past couple of decades. But it also meant that SVB had a lot of eggs in one basket. As inflation and interest rates soared last year, investors grew less willing to get behind companies that were putting growth ahead of profits, causing a chill among a set of companies that hadn’t had to work very hard to raise money during an extended period of ultra-low interest rates. That meant SVB didn’t have as much money coming in.
Eventually, depositors grew nervous about the health of SVB’s balance sheet and started a run on its assets last week. That’s when regulators shut it down. amid signs of a run on its deposits. It was the third U.S. regional bank to collapse in five days, following SVB and Silvergate Capital Corp., who faces criminal charges over the implosion of his company.Article contentThere’s a general uneasiness in financial markets over whether the global economy can handle the sharp increase in interest rates orchestrated by the Fed and other central banks over the past year. Labour markets in the U.S.
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Can the Government Contain a Banking Crisis? - The Journal. - WSJ PodcastsWhen Silicon Valley Bank imploded last week, it was the second biggest bank failure in U.S. history. Then, over the weekend, another bank, Signature Bank, was also taken over by the government. WSJ financial editor Charles Forelle explains what kicked off this banking crisis and how the government is scrambling to contain it. Further Reading: - How Silicon Valley Turned on Silicon Valley Bank - Silicon Valley Bank Closed by Regulators, FDIC Takes Control - Were SVB and Signature Bank Just Bailed Out by the U.S. Government?
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