Fed faults Silicon Valley Bank execs, itself in bank failure
From Silicon Valley Bank’s failure to the rescue of First Republic, keep up with the latest developments in the crisis of confidence afflicting banks in California and beyond.of New York. Although regulators guaranteed all the banks’ deposits, customers at other midsize regional banks rushed to pull out their money — often with a few taps on a mobile device — and move it to the perceived safety of big money center banks such as JPMorgan Chase.
The report also looks at the role social media and technology played in the bank’s last days. While the bank’s management was poor and ultimately that was the reason the bank failed, the report also notes that social media caused a bank run that happened in just hours, compared with days for earlier bank runs like those seen in 2008.
Although the withdrawals have abated at many banks, First Republic Bank in San Francisco appears to be in peril, even after receiving a $30-billion infusion of deposits from 11 major banks in March. The bank’safter it revealed the extent to which customers pulled their deposits in the days after Silicon Valley Bank failed.
The nation’s banks are regulated by a troika of regulators: the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. All have been criticized for potentially missing signs that Silicon Valley Bank and Signature Bank might be in trouble.Silicon Valley management as early as the fall of 2021 of risks stemming from its business model, but the bank’s managers failed to take the steps necessary to fix the problems.
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