The US Federal
Reserve (Fed) announced on Monday the initiation of an internal probe into the Silicon Valley Bank (SVB) failure, which Michael S. Barr, the Vice Chair for Supervision at the central bank, will lead.
Fed Initiates Internal
Probe Over SVB Collapse
According
to the official publication from 13 March 2023, Bar and his team will review how
SVB was regulated and supervised by Fed before its collapse in search of potential
negligence that could explain the reasons for the sudden bankruptcy of the
institution. The final results will be released to the public by 1 May 2023.
“The
events surrounding Silicon Valley Bank demand a thorough, transparent, and
swift review by the Federal Reserve. We need to have humility, and conduct a
careful and thorough review of how we supervised and regulated this firm, and
what we should learn from this experience,” Jerome H. Powell, the Chairman
of the Federal Reserve Board, commented.
@federalreserve announces that Vice Chair for Supervision Michael S. Barr is leading a review of the supervision and regulation of Silicon Valley Bank, in light of its failure. The review will be publicly released by May 1: https://t.co/wQ39KLiwHE
— Federal Reserve (@federalreserve) March 13, 2023
On 10 March,
the California Department of Financial Protection and Innovation took the
decision to close down SVB without providing any clear explanation for the
abrupt action. According to reports, SVB had been struggling with severe
liquidity issues and was teetering on the brink of collapse. This was
attributed to significant losses incurred on government bond investments as
well as deposit withdrawals by worried customers, which compounded the bank’s
financial woes.
The
Californian authority’s decision triggered a market panic and led to a dynamic
fall of bank shares around the world.
Credit Suisse Tests Record-Lows,
First Republic Bank Slumps over 60%
The
collapse of SVB triggered a strong response from the cryptocurrency community due
to the capital links of large companies in the industry with the bank. Circle,
a stablecoin USDC issuer, allocated 8% of its USDC reserves, equivalent to
$3.3 billion, to Silicon Valley Bank. This caused initial panic and a
depreciation of the stablecoin against the US dollar. However, most of the
panic subsided over the weekend and Bitcoin (BTC) rebounded quickly from
multi-month lows to near-month highs.
Nonetheless,
uncertainty continues to grip traditional stock exchanges, particularly in the
banking sector. According to a report by Finance Magnates, Credit
Suisse, the troubled banking giant, saw its shares drop to historic lows in
response to news of SVB’s collapse.
Shares in
Credit Suisse (SIX: CSGN) started this week at EUR 2.5 but were down around 9.5%,
to EUR 2.15 after the closing bell on Monday, touching an all-time low. The
lender has lost approximately 20% since the beginning of the year after
its shares plummeted almost 70% in 2022.
Credit Suisse Shares Test New All-Time Low. Source: Tradingview.com
However, the
stocks of the regional lender, First Republic Bank tanked the most, plunging over
60% on Monday, accounting for the largest share loss. Several other lenders saw
significant drops in their stock prices as well. For instance, Zions
Bancorporation’s shares fell by 25% to $30, while Charles Schwab’s dropped by
11% to $52, and Bank of America’s decreased by 3% to $29, among others. The volatile
trading activity led to many of these stocks being halted multiple times
throughout the day.
First Republic Bank Shares Closed at Lowest Levels Since 2012. Source: Tradingview.com
On Sunday, Treasury
Secretary Janet Yellen, Federal Reserve Chair Jerome Powell, and FIDC Chairman
Martin Gruenberg said in a joint statement that the depositors’ claims would be
fully protected. The Fed convened a special meeting to address the market panic
and issued a notice to launch an internal investigation.
The US Federal
Reserve (Fed) announced on Monday the initiation of an internal probe into the Silicon Valley Bank (SVB) failure, which Michael S. Barr, the Vice Chair for Supervision at the central bank, will lead.
Fed Initiates Internal
Probe Over SVB Collapse
According
to the official publication from 13 March 2023, Bar and his team will review how
SVB was regulated and supervised by Fed before its collapse in search of potential
negligence that could explain the reasons for the sudden bankruptcy of the
institution. The final results will be released to the public by 1 May 2023.
“The
events surrounding Silicon Valley Bank demand a thorough, transparent, and
swift review by the Federal Reserve. We need to have humility, and conduct a
careful and thorough review of how we supervised and regulated this firm, and
what we should learn from this experience,” Jerome H. Powell, the Chairman
of the Federal Reserve Board, commented.
@federalreserve announces that Vice Chair for Supervision Michael S. Barr is leading a review of the supervision and regulation of Silicon Valley Bank, in light of its failure. The review will be publicly released by May 1: https://t.co/wQ39KLiwHE
— Federal Reserve (@federalreserve) March 13, 2023
On 10 March,
the California Department of Financial Protection and Innovation took the
decision to close down SVB without providing any clear explanation for the
abrupt action. According to reports, SVB had been struggling with severe
liquidity issues and was teetering on the brink of collapse. This was
attributed to significant losses incurred on government bond investments as
well as deposit withdrawals by worried customers, which compounded the bank’s
financial woes.
The
Californian authority’s decision triggered a market panic and led to a dynamic
fall of bank shares around the world.
Credit Suisse Tests Record-Lows,
First Republic Bank Slumps over 60%
The
collapse of SVB triggered a strong response from the cryptocurrency community due
to the capital links of large companies in the industry with the bank. Circle,
a stablecoin USDC issuer, allocated 8% of its USDC reserves, equivalent to
$3.3 billion, to Silicon Valley Bank. This caused initial panic and a
depreciation of the stablecoin against the US dollar. However, most of the
panic subsided over the weekend and Bitcoin (BTC) rebounded quickly from
multi-month lows to near-month highs.
Nonetheless,
uncertainty continues to grip traditional stock exchanges, particularly in the
banking sector. According to a report by Finance Magnates, Credit
Suisse, the troubled banking giant, saw its shares drop to historic lows in
response to news of SVB’s collapse.
Shares in
Credit Suisse (SIX: CSGN) started this week at EUR 2.5 but were down around 9.5%,
to EUR 2.15 after the closing bell on Monday, touching an all-time low. The
lender has lost approximately 20% since the beginning of the year after
its shares plummeted almost 70% in 2022.
Credit Suisse Shares Test New All-Time Low. Source: Tradingview.com
However, the
stocks of the regional lender, First Republic Bank tanked the most, plunging over
60% on Monday, accounting for the largest share loss. Several other lenders saw
significant drops in their stock prices as well. For instance, Zions
Bancorporation’s shares fell by 25% to $30, while Charles Schwab’s dropped by
11% to $52, and Bank of America’s decreased by 3% to $29, among others. The volatile
trading activity led to many of these stocks being halted multiple times
throughout the day.
First Republic Bank Shares Closed at Lowest Levels Since 2012. Source: Tradingview.com
On Sunday, Treasury
Secretary Janet Yellen, Federal Reserve Chair Jerome Powell, and FIDC Chairman
Martin Gruenberg said in a joint statement that the depositors’ claims would be
fully protected. The Fed convened a special meeting to address the market panic
and issued a notice to launch an internal investigation.
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Damian Chmiel