America had the second largest banking collapse in history 4

America had the second largest banking collapse in history 4

Silicon Valley Bank - a bank specializing in lending to startups - was closed by California officials on March 10, causing turmoil in the global market.

On March 10, California bank officials appointed the US Federal Deposit Insurance Corporation (FDIC) to manage Silicon Valley Bank’s assets.

The main office and all branches of this bank will reopen on March 13.

The reason is that FDIC deposit insurance is only for customers who use daily and deposit a maximum of 250,000 USD.

The FDIC said it will sell SVB’s assets and that future dividend payments may go to uninsured depositors.

Outside the headquarters of Silicon Valley Bank in California (USA) on March 10.

SVB’s troubles started on March 8.

SVB Financial Group shares therefore dropped 60% on March 9 and were suspended from trading afterward.

`SVB’s condition deteriorated so quickly that it could not last a few more hours,` Better Markets CEO Dennis M. Kelleher commented, `The reason was that depositors withdrew too quickly, causing the bank to lose liquidity.

SVB’s collapse was partly due to the US Federal Reserve’s (Fed) aggressive policy of raising interest rates last year.

High interest rates also make it difficult for technology companies, as they reduce stock prices and make it difficult for them to raise capital, Moody’s chief economist Mark Zandi explained.

`High interest rates also reduced the value of government bonds and other securities that SVB needed to pay depositors. All of this sparked a wave of deposit withdrawals, forcing the FDIC to take over SVB

The collapse of SVB is creating a shock to the startup community – a group that considers this a reliable place to raise capital.

Many Wall Street analysts believe that SVB’s troubles cannot spread throughout the banking system.

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