The collapse of Silicon Valley Bank appears to have been a perfect storm from failures of management, hyped up social media, risky liabilities and the speed of digital banking.
Former Congressional Budget Office Director Doug Holtz-Eakin discusses if a systemic banking crisis is still lurking on 'Cavuto: Coast to Coast.' was not your average bank run; it was so fast, it shocked even the most seasoned regulators as depositors siphoned $42 billon from the bank in just hours, leaving the firm with a negative cash balance of $958 million on March 9.
"This is a very large group of connected depositors, concentrated group of connected depositors, in a very, very fast run, faster than historical record would suggest" said Federal Reserve Chairman Jerome Powell in his press conference after policymakers raised interest rates by 25 basis points last week.
"The speed of the run, it's very different from what we've seen in the past, and it does kind of suggest that there's a need for possible regulatory and supervisory changes just because supervision and regulation need to keep up with what's happening in the world" Powell added. FDIC representatives Luis Mayorga and Igor Fayermark speak with customers outside the Silicon Valley Bank headquarters in Santa Clara, California, March 13, 2023.
On Tuesday, Fed Vice Chair Michael Barr, the central bank’s point for bank supervision, will tell lawmakers at a hearing on the SVB and Signature Bank collapses that the banks’ top brass were asleep at the wheel, noting, "SVB's failure is a textbook case of mismanagement," according to prepared testimony. He also noted that "the bank failed to manage the risks of its liabilities.
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