While being a unique situation, it was clear that a bank failure this size was causing worries. PacWest Bank, a California-based bank that caters to small to medium-sized businesses, plunged 38% on Friday. The stock of First Republic Bank, a bank that serves the wealthy and technology companies, is down nearly a third in two days.
The nation's banking system is healthy, holds more capital than it has ever held in its history, and has undergone multiple stress tests that shows the overall system could withstand even a substantial economic recession.įurther, it appears that Silicon Valley Bank's failure appears to be a unique situation where the bank's executives made poor business decisions by buying bonds just as the Federal Reserve was about to raise interest rates, and the bank was singularly exposed to one particular industry that has seen a severe contraction in the past year.ĭespite being a potentially unique collapse, Silicon Valley Bank's demise hasn't stopped investors for looking for other banks that might have similar situations. government.ĭespite the panic from Silicon Valley, there are no signs that the bank's failure could lead to a 2008-like crisis. There have been multiple bidders for assets, but as of Sunday morning, the bank's corpse remained in the custody of the U.S. Staff at the Federal Deposit Insurance Corporation - the agency that insures bank deposits under $250,000 - have worked through the weekend looking for a potential buyer for the assets of the failed bank.
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