'They allow bankers to make investments that are not proper, but interest rates are at zero, so they can get away with it. But when interest rates get back to normal, they then pay the price, and ultimately, it comes back to the people.'
about how high to raise its benchmark interest rate in the fight against chronically high inflation.
At the Wells Fargo across the street, KPBS spoke to two customers who did not want their names used. One man said,"They allow bankers to make investments that are not proper but interest rates are at zero so they can get away with it. But when interest rates get back to normal they then pay the price and ultimately it comes back to the people."
Last week, many economists suggested that Fed policymakers would raise their projection for future rates next week to 5.6%. Now it's suddenly unclear how many additional rate increases the Fed will forecast. A Federal Reserve spokesperson declined to comment further. A spokesperson for the California Department of Financial Protection also declined to comment.. Its management took excessive risks by buying billions of dollars of mortgage-backed securities and Treasury bonds when interest rates were low. As the Fed continually raised interest rates to fight inflation, leading to higher rates on Treasurys, the value of Silicon Valley's bonds steadily lost value.
Such an unusually high proportion made Silicon Valley Bank highly susceptible to the risk that depositors would quickly withdraw their money at the first sign of trouble — a classic bank run — which is exactly what happened.
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