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| Several U.S. banking regulatory agencies communicated urgently to deal with the aftermath of the collapse of Silicon Valley Bank: |
Several U.S. banking regulatory agencies communicated urgently to deal with the aftermath of the collapse of Silicon Valley Bank:
A food delivery driver prepares to enter a Silicon Valley Bank (SVB) branch in Santa Clara, Calif. On March 10, 2023, the Federal Deposit Insurance Corporation (FDIC) has taken over all assets of the bank. SVB's collapse was the largest U.S. bank failure since Washington Mutual collapsed in the 2008 financial crisis. The FDIC ordered SVB out of business and immediately seized all customer deposits at the bank.
WASHINGTON —
The U.S. Congress is communicating with regulatory authorities such as the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) to discuss how to deal with the failure of Silicon Valley Bank SVB Financial Group.
The news was reported on Saturday (March 11) by Coindesk, an authoritative media on cryptocurrency and blockchain in the United States.
Rep. Maxine Waters, a Democrat in the U.S. House of Representatives, briefed the two regulators and the U.S. Treasury on Friday hours after SVB declared bankruptcy, the report said.
Additionally, Rep. Ro Khanna tweeted Friday that he had discussed the bank's status with the White House and Treasury Department.
Silicon Valley Bank is the greatest bank disappointment since the 2008 monetary emergency. The incident shook stock markets around the world, with banking stocks diving.
The Dow fell 345.22, the S&P 500 fell 56.73 and the tech-heavy Nasdaq fell 199.46. Stock markets in Europe and Asia also saw wild swings. The stock costs of the four significant U.S. banks JPMorgan Chase, Bank of America, Wells Fargo and Citigroup plummeted, wiping out more than $50 billion in total market value.
U.S. Treasury Secretary Janet Yellen also discussed the matter with officials from the bank regulator. Both Yellen and the White House said they were confident in the agency's ability to resolve the bank failure.
Silicon Valley Bank is the 16th largest bank in the United States, with assets of more than 200 billion US dollars, mainly serving start-ups in the technology industry. It is generally believed that this bank's investment is relatively conservative, and the risk of its asset portfolio is not high. A large part of its asset portfolio is low-risk bonds.
There are two main reasons for its closure. First, it was affected by the collapse last year of one of its major clients, the cryptocurrency exchange FTX. Regulatory investigations into FTX unnerved Silicon Valley Bank customers, triggering a run on the bank. Second, in the face of a run-on tide, Silicon Valley Bank was forced to sell $21 billion of high-quality securities, but the value of these securities was greatly depreciated by the impact of the Fed's strong interest rate hikes. dollar loss.
Many industry commenters on the Internet said that if it were not for the Fed's forced interest rate hike, Silicon Valley Bank would sell bonds at normal prices, and it is likely to raise enough funds to cope with the run and avoid bankruptcy.
The Wall Street Journal said that the FDIC has taken over Silicon Valley Bank and has transferred all its deposits to a new physical bank created by the FDIC; GFIC said that starting next Monday, protected depositors can go to the bank to withdraw deposits of less than $250,000.
Depositors with more than $250,000 in deposits will receive a certificate of receivership and contact the FDIC a week later to discuss a settlement.
Most people in the industry believe that this event is different from the 2008 financial crisis and is unlikely to cause full-scale financial turmoil. Since 2008, the supervision of the US banking industry has been very strict, and bank firewalls have been established. In addition, after the incident, the U.S. regulatory authorities quickly took over Silicon Valley Bank to control the spillover effect.
Gerard Cassidy, an analyst at the Royal Bank of Canada, told the media that the spillover effect caused by the liquidity risk of Silicon Valley Bank is limited. It is unlikely that large-scale funds will flee.
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