Second-biggest failure of a financial institution in US history
By 
At least in nominal terms:
Silicon Valley Bank collapsed Friday morning after a stunning 48 hours in which a bank run and a capital crisis led to the second-largest failure of a financial institution in US history.
California regulators closed down the tech lender and put it under the control of the US Federal Deposit Insurance Corporation. The FDIC is acting as a receiver, which typically means it will liquidate the bank’s assets to pay back its customers, including depositors and creditors. . .
Silicon Valley Bank’s decline stems partly from the Federal Reserve’s aggressive interest rate hikes over the past year.
After years of interest rates hovering around zero, the central bank last spring began a series of historic rate hikes to make borrowing for businesses and individuals more expensive — a way to cool the economy and bring inflation in line.
Higher rates hit tech especially hard, undercutting the value of tech stocks and making it tough to raise funds, Moody’s chief economist Mark Zandi said. That prompted many tech firms to draw down the deposits they held at SVB to fund their operations.
“Higher rates have also lowered the value of their treasury and other securities which SVB needed to pay depositors,” Zandi said. ” All of this set off the run on their deposits that forced the FDIC to takeover SVB.”
Despite initial panic on Wall Street over the run on SVB, which caused its shares to crater, analysts said the bank’s collapse is unlikely to set off the kind of domino effect that gripped the banking industry during the financial crisis.
“The system is as well-capitalized and liquid as it has ever been,” Zandi said. “The banks that are now in trouble are much too small to be a meaningful threat to the broader system.”
But smaller banks that are disproportionately tied to cash-strapped industries like tech and crypto may be in for a rough ride, according to Ed Moya, senior market analyst at Oanda.
“Everyone on Wall Street knew that the Fed’s rate-hiking campaign would eventually break something, and right now that is taking down small banks,” Moya said.
Hmmmm.
The crypto industry being “cash strapped” gave me a juvenile giggle.
. . . One rich person losing money is a tragedy; a million poor people getting evicted is a statistic.
https://twitter.com/JStein_WaPo/status/1634283924301008918