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Major US bank collapses in biggest failure since 2008 crisis
Major US tech bank implodes, The collapse of Silicon Valley Bank biggest bank failure since 2008
Major US tech bank implodes
The collapse of Silicon Valley Bank is considered the biggest bank failure since the 2008 financial crisis
source, https://www.bitchute.com/video/vAHGyDHjRxSM/
US tech and start-up focused Silicon Valley Bank (SVB) was shut down by regulators on Friday after depositors rushed to withdraw their money amid worries over the bank’s financial health. According to an announcement from the Federal Deposit Insurance Corporation (FDIC), California regulators have taken control of the lender’s deposits and transferred the assets to a newly created entity, the Deposit Insurance Bank of Santa Clara.
SVB, a major bank for venture-backed firms, ranked as the 16th biggest US lender at the end of last year, with about $209 billion in total assets and $175.4 billion in deposits. However, according to market analysts, the lender has been under pressure lately due to fears of a recession, higher interest rates, and a slowdown in the market for initial public offerings. These factors made it harder for start-ups to raise additional cash and led companies to draw down their deposits at SVB and similar lenders.
Earlier this week, the bank announced that it had lost $1.8 billion on asset sales made in an attempt to raise capital to offset deposit outflows, and planned to sell some $2.25 billion in new shares. The announcement, however, sparked more withdrawals. As a result, the bank’s shares plunged 60% on Thursday, and another 60% in premarket trading on Friday. The FDIC was forced to intervene and halt the sales as depositors were withdrawing their money in such a rush that the bank’s insolvency became unavoidable, market experts say.
The FDIC said SVB offices will reopen on Monday so that insured depositors will be able to withdraw deposits. However, according to regulators, 89% of the bank’s deposits were not insured, which means that billions of dollars may now be stranded. According to Reuters sources, the agency is currently seeking another bank to merge with SVB to safeguard unsecured deposits.
The collapse of the tech-focused lender and its possible repercussions has been widely discussed on social media. One Twitter user suggested that it should acquire SVB “and become a digital bank,” drawing many comments. They included one from Twitter owner Elon Musk, who wrote that he is “open to the idea.”
SVB’s failure is considered the largest collapse in the US banking system since the Washington Mutual implosion, the event that sparked the 2008 financial crisis. SVB’s collapse has already sent shockwaves through European and Asian stock markets, which plummeted on Friday as investors started offloading US bank stocks due to liquidity concerns.
10 Mar, 2023 15:00
Banking rout rattles global markets
The downward trend follows a sharp selloff in US financial stocks
European and Asian stock markets plummeted on Friday, following a rout in US equities amid liquidity concerns in the banking sector. The meltdown was triggered by US bank SVB Financial, known as Silicon Valley Bank (SVB), which plunged 60% on Thursday after revealing that it needed to raise more than $2 billion in capital to offset losses from bond sales.
The announcement rocked financial stocks, with Euro Stoxx Banks index on Friday on pace for its worst day since June, led by a decline of more than 8% for Deutsche Bank. Societe Generale, HSBC, ING Group and Commerzbank all tumbled more than 5%.
Asian stocks suffered their worst day in five months, with Hong Kong’s Hang Seng index plummeting 3% on losses in heavyweight technology stocks. The Shanghai Composite dropped 1.4%, while Japan’s Nikkei 225 index fell 1.67%.
Investors started offloading US bank stocks on Thursday after SVB, a major lender to the tech industry, announced aggressive measures to support its balance sheet. The bank had reportedly been forced to sell all of its available-for-sale bonds at a $1.8 billion loss as its startup clients withdrew deposits.
The news, which follows the collapse of the crypto-focused bank Silvergate, led to another wave of deposit withdrawals, people familiar with the matter told CNBC.
All of this led to the four largest US banks – JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup – seeing their stock prices lose a cumulative $52 billion in a single day.
SVB, which had a market value of $16.8 billion to end last week, was worth $6.3 billion as of Thursday.
“The issues at SVB have been like a cold shower and with the Fed having just countenanced the idea of faster hikes once again, the potential for a very unhappy equity market should the jobs data surprise on the upside is very real indeed,” James Athey, investment director at global investment company Abrdn, told Bloomberg. “It has always been the case that the sort of hikes we have seen from the Fed were going to cause problems somewhere,” he added.
https://www.rt.com/business/572757-banking-rout-rattles-global-markets/
- Category: Uncategorized
- Duration: 03:42
- Date: 2023-03-11 13:34:43
- Tags: silicon, valley, bank, collapse,
7 Comments
Video Transcript:
The Fed cannot raise interest rates high enough to bring down inflation because inflation is mostly supply side They can't do anything about that. So they're trying to take inflation down by raising interest rates and others crushing demand alone Right, but when they raise it up a certain level between five and six I've been predicting you're going to start getting financial instability and we see that already now With the Silicon Valley Bank because the tech sector is the most exposed right now and You know, there's like 250 companies that that have their money in Silicon Valley Bank a lot of them start up And if they if that bank goes belly up and they lose that money Well a whole bunch of startups are gonna go a good a crash, right? That's where the government I think is gonna really jump in and bail it out and it's already signs they're doing it But we don't know the contagion between Silicon Valley Bank and other tech financial funders and other commercial banks that fund these tech banks You know the tentacles of contagion are very widespread and we don't really know it because they're these tentacles These debt tentacles are always very opaque, you know We saw that back with the housing sector crash and we're gonna find out over the weekend Or start to find out what are the contagion potential here for the collapse of this bank very important bank And it'd be interesting to see what happens on Monday both in the financial markets stock and bond markets and also all next week because we'll beginning To see it will leak out Step by step, I think on on what the contagion is and it may shut down the funding of startups in the tech industry For a while so you know, it's all traceable to the fed interest rate policy and Biden's policy of attacking tech tech Chinese technology and trying to get businesses to come back to the US which is part of the geopolitical The problem with Biden is that It's all GEO politics and You know what happens to the economy be damned really as the US tries to ring fence Russia and China and the other countries who may align with them the US is bifurcating Slowly the global Economy the global capitalist economy, but it's all because the geopolitical objectives, I believe And it's it's gonna be a big price to pay I think eventually by you know a couple of years from now I think it's too early much too early to say that and Unlike in 2008 boy the government is jumping on this thing ensuring bailouts and so forth Already within 24 hours, you know, they learned their lesson of not dragging their feet back then I think one of the consequences if if there is contagion is the fed's gonna stop raising rates Because they're gonna take care of the financial sector first and that means inflation is gonna Stay high 345 percent. It's not gonna come down So then between a rock and a hard place, you know do they try to keep bringing inflation down by raising rates or by raising rates Do they cause through the financial stress? The Fed doesn't work very well the policy doesn't work very well anymore in the 21st century where you got a globalized Financialized world economy