Today's Article

“The quick collapses of Silicon Valley Bank and Signature Bank were no ordinary failures.”

Michael Barr, a top US Federal Reserve official, says the meltdown at SVB started at the top.

“This is a textbook case of bank 4mismanagement.”

Barr testified that SVB had 5been on the Fed’s radar since November 2021 when it was cited for 6interest rates and 7liquidity risks.

“They didn’t take the action necessary. They were quite 8vulnerable to risks, to shocks, and they didn’t take the actions necessary.”

The bank, he says, collapsed after 9depositors tried to 10withdraw $100 billion in a single day driven by social media and 11mobile banking.

“The bank did not have enough 12collateral to meet that and therefore they were not able to actually meet their obligations to pay their depositors over the course that day and they were shut down.”

While the Federal government stepped in to 13guarantee deposits at the two failed banks and set up a 14facility to help prevent runs at other banks, some lawmakers demanding regulators take further action to prevent a similar banking crisis in the future

“If it’s the regulator’s fault, it better be 15fixed. If it’s the regulation fault, it better be fixed,”

The congressional investigations into the financial sector’s 16instability come as fears of 17recession are mounting.