Isn’t it bizarre that so many people who cause problems then turn around and become heroes fixing the same problems they created?
In December President Biden, the newly self-declared inflation warrior, said, “My goal is simple: get prices under control without choking off economic growth.” And there it is: The Biden administration is trying to slay an inflation dragon that it created.
European financial regulators have ripped their American counterparts’ decision to bail out Silicon Valley Bank (SVB) in the wake of its collapse, claiming they violated their own standards in doing so, according to the Financial Times. They are particularly frustrated at the decision to cover all deposits when they were only supposed to guarantee up to $250,000.
California governor Gavin Newsom (D.) helped persuade President Joe Biden to bail out Silicon Valley Bank and was one of the first politicians to praise the move. His assistance comes years after the failed bank began lobbying California’s government and donating to Newsom’s wife.
In financial markets, the tide has been going out for a while and is still receding. To paraphrase Warren Buffett, we are starting to get a good look at who has been swimming naked. It isn’t pretty.
His latest bailout is a solution for him now and a problem for us later.
Notice that the giant rout in bank stocks on Monday came after, not before, Washington stepped in with funding help and an implicit universal deposit guarantee in the wake of the federal seizure of California’s struggling Silicon Valley Bank and New York’s Signature Bank.
President Biden tried to reassure Americans early Monday morning that the banking system is safe and not to worry about the failures of Silicon Valley (SVB) and Signature banks. Markets didn’t believe him because bank stocks took another plunge, with some down 60% or more.
Shockwaves from the collapse of Silicon Valley Bank further pounded global bank stocks on Tuesday as assurances from President Joe Biden and other policymakers did little to calm markets and prompted a rethink on the interest rate outlook.
A Silicon Valley Bank (SVB) shareholder filed a class-action lawsuit against the company for failing to disclose risks associated with its business model, according to Bloomberg Law.
That giant slurping sound on Friday was Silicon Valley Bank imploding. America’s 16th-largest bank had some $175 billion in deposits and disappeared by breakfast. It wouldn’t have happened if not for management mistakes. This was a 21st-century bank run—customers tried to withdraw about $42 billion, a quarter of all deposits. But what triggered the collapse?
After a dramatic weekend, regulators said the failed bank’s customers will have access to all their deposits starting Monday and set up a new facility to give banks access to emergency funds. The Federal Reserve also made it easier for banks to borrow from it in emergencies.
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