Bank regulators are racing to sort out Friday’s stunningly hasty collapse of Silicon Valley Bank and are facing high stakes as they try to shield the banking system from wider fallout
whose shares have been slammed by contagion concerns. More serious financial instability could make the Fed’s decisions about how much to raise interest rates more fraught.Silicon Valley Bank collapsed on Friday, becoming the largest bank to fail since the 2008 financial crisis. On Monday, March 13, at 3:00 p.m. ET, join the Journal’s Wall Street and Financial Industry Bureau Chief Dana Cimilluca for a conversation about what the bank failure means for global markets and regulators.
SVB faced a unique set of challenges. Deposits at the bank surged after the pandemic and federal policy response left the technology sector flush with cash in 2021. The Santa Clara, Calif.-based lender saw total deposits mushroom to nearly $200 billion by March 2022, up from more than $60 billion two years earlier.
The rapid tightening hammered stocks and bonds and indirectly contributed to the demise of Kidder Peabody & Co., the bankruptcy of Orange County, Calif., and Mexico’s peso devaluation, which required a bailout from the U.S. and the International Monetary Fund. “I believe we have tools in place to address any financial stability concerns and should not be looking to monetary policy for this purpose,” Fed governor Christopher Waller said in a speech last October. “The focus of monetary policy needs to be fighting inflation.”
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