KRE - Silicon Valley Bank - Blame Game

2023-03-19 03:58:00 ET

Summary

• The media, Congress, and others are blaming bank supervisors, deregulation, and previous administrations in an effort to assign responsibility for the collapse and subsequent fallout from the demise of Silicon Valley Bank and Signature Bank.
• While credit risk was not an important factor, SVB was exposed to significant interest rate and liquidity risks that resulted in a run on the bank.
• The downfall of both of these institutions reflects the failure to learn the lessons from past crises and what can happen when interest rates begin to rise - if there is a lack of diversification and insufficient liquidity to meet demands for funds.

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