Traders blame the collapse of Silicon Valley Bank on SVB's 'greed and avarice' - and the Fed is now in a tight spot because of it.
— and VC money, by the way, has slowed, which hurt SVB’s deposit base — while the cost of everything is continuing to soar.According to Federal Reserve data, aggressive money-printing and stimulus checks to fight the pandemic. So, now, the central bank is pursuing its most aggressive interest rate hikes since the 1980s — which was one of the factors that led to SVB’s insolvency.
At the same time, the causes and consequences of the US’s second-largest-ever bank run have ripple effects that we still don’t know the extent of yet. “We had the Federal Board of Reserve change from fractional reserves to no reserves, and that let banks like SVB go out and start buying assets instead of simply loaning money. My contention is banking should be boring, a lot like watching paint dry — and any time it’s not, you’ve got a problem. Which is unfortunately what happened.
In the case of SVB, however, the FDIC now says it will make sure every single depositor has every dollar they had in the bank coveredThe implicit guarantee is that the $250,000 threshold basically doesn’t exist anymore. Because if you do this for SVB, you’ve got to do it for every other bank in Silicon Valley, as well as all the rest from Wall Street to Main Street.
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