Us second largest Bank collapsed in US history
Bank , Economy , History | March 13, 2023 / 03:03 AM UST
The second-largest US bank failure in history occurred today with the closure of Silicon Valley Bank (SVB). At the time of its demise, SVB had $209 billion worth of assets. Even after accounting for inflation, it is only second in terms of assets to Washington Mutual, which had $434 billion in assets at the time of its 2008 failure.
A conference of bankers in Washington on Monday heard a $620 billion risk warning from the director of the Federal Deposit Insurance Corp.
There will soon be a national discussion about whether US authorities were proactive enough and alert enough before this week's collapse of Silvergate Capital Corp. and the much larger SVB Financial Group.
Several Silicon Valley business owners are furious and in the dark as a result of SVB's sudden demise, which is the biggest in more than a decade. Politicians in Washington are taking sides, and Biden administration officials have expressed "complete confidence" in the regulators, despite the fact that some watchdogs are rushing to assess plans for addressing previous crises.
To his credit, FDIC Chief Martin Gruenberg has previously expressed alarm about the fact that banks' balance sheets were weighed down by low-interest bonds that had seen their value plummet by hundreds of billions of dollars due to the Federal Reserve's accelerated rate hikes. This increases the possibility that a bank will fail if withdrawals compel it to liquidate such assets and incur losses.
But despite his concerns, two California lenders went bankrupt in the course of a week, a stark contrast to the years since the 2008 financial crisis. At the time, regulators, including the FDIC, neatly seized hundreds of failing banks and usually only taxied them to their banks. Headquarters after the US shut down on Friday - Trade.
Even in the darkest hours of the era, authorities intervened in Bear Stearns and Lehman Brothers Holdings, closing markets over the weekend.
The California Department of Financial Protection and Innovation has closed SVB and appointed the FDIC as its trustee, according to a press release from the regulator. The FDIC then established the Deposit Insurance National Bank of Santa Clara, which currently holds SVB's insured deposits.
