Over 10 turbulent weeks earlier this year, a string of US banks with combined assets of more than $500 billion collapsed. The tale of what happened, and what the government can do to prevent a recurrence, is still being written.
In March, Silvergate Capital, Silicon Valley Bank and Signature Bank of New York collapsed, followed by First Republic Bank on May 1. Silvergate and Signature were hurt by their connections to a cryptocurrency market that had boomed and faltered. SVB and First Republic were hurt by investments that proved to be vulnerable to a risk the banks hadn’t adequately prepared for – rapid interest rate hikes by the Federal Reserve after years of near-zero rates.
Author: Herbert Robinson
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