{"id":2612,"date":"2023-03-19T05:36:15","date_gmt":"2023-03-19T10:36:15","guid":{"rendered":"https:\/\/embarrdowns.com\/is-my-money-safe-examining-the-spectacular-collapse-of-silicon-valley-bank\/"},"modified":"2023-03-19T05:36:16","modified_gmt":"2023-03-19T10:36:16","slug":"is-my-money-safe-examining-the-spectacular-collapse-of-silicon-valley-bank","status":"publish","type":"post","link":"https:\/\/embarrdowns.com\/is-my-money-safe-examining-the-spectacular-collapse-of-silicon-valley-bank\/","title":{"rendered":"Is My Money Safe? Examining the Spectacular Collapse of Silicon Valley Bank"},"content":{"rendered":"

Silicon Valley Bank\u2019s spectacular collapse last week has left many bank customers with an all-too-familiar question: Is my money safe?[0]<\/a><\/sup> The Federal Deposit Insurance Corporation (FDIC) took control of the bank in the second-largest bank failure in US history, and the Federal Reserve Board promised to protect all depositors, up to the $250,000 insured by the FDIC.[1]<\/a><\/sup> But the failure of the bank has raised broader questions about the health of the financial sector, and why the FDIC stepped in when it did.<\/p>\n

Management of SVB is primarily responsible for the disaster.[2]<\/a><\/sup> Regulators should understand that they are in place because bankers are often tempted to take risks.[2]<\/a><\/sup> Bankers often attempt to expand rapidly, acquire loans at low interest rates, lend money liberally, and secure their investments for extended periods in the pursuit of higher yields.[2]<\/a><\/sup><\/p>\n

As early as last November, one journalist had noticed the increasing risks that banks, including Silicon Valley Bank, were facing; the head of the Federal Deposit Insurance Corporation had also cautioned about the dilemma.[2]<\/a><\/sup> Some short sellers began to take a bearish stance on the bank’s stock.[2]<\/a><\/sup> The irresponsible behavior of bankers and a lack of oversight from regulators have culminated in a severe financial crisis, leading to a government bailout. Regulators have vowed to be more vigilant in the future, although this is a promise that has been heard before.[3]<\/a><\/sup><\/p>\n

For most of the year, Silicon Valley Bank had not had a chief risk officer, which was far from ideal.[2]<\/a><\/sup> Jeff Hauser, the founder and director of the Revolving Door Project, a D.C. nonprofit that follows the regulatory sector, informed me, “Regulators had to be aware of this, and it has to be significant.”[2]<\/a><\/sup> Once we regard success as a sign of intelligence, it becomes difficult for a lowly bank examiner to express that “This institution does not have an individual in charge of risk management and does not have a strategy to handle the risk associated with its assets.”[2]<\/a><\/sup><\/p>\n

Regulators of banks possess incredible authority.[2]<\/a><\/sup> A bank’s operations can be examined and changes can be demanded by them.[2]<\/a><\/sup> They rarely solve the problem.[2]<\/a><\/sup> Chris Whalen, a long-time financial analyst, informed me that the regulators are comparable to all of the conflicted agents in the ratings agencies and other fields.[2]<\/a><\/sup> In prosperous times, they go along with the tide; however, in difficult times, they fail to deliver.[2]<\/a><\/sup><\/p>\n

0. <\/span>“Here’s who made money amid the Silicon Valley Bank turmoil” ABC News, 17 Mar. 2023, https:\/\/abcnews.go.com\/Business\/made-money-amid-silicon-valley-bank-turmoil\/story?id=97877087<\/a><\/a><\/p>\n

1. <\/span>“Congressman discusses why Silicon Valley Bank failed – San Jos\u00e9 Spotlight” San Jos\u00e9 Spotlight, 17 Mar. 2023, https:\/\/sanjosespotlight.com\/us-congressman-ro-khanna-discusses-why-silicon-valley-bank-svb-failed\/<\/a><\/a><\/p>\n

2. <\/span>“So Where Were SVB\u2019s Regulators?” The Atlantic, 17 Mar. 2023, https:\/\/www.theatlantic.com\/ideas\/archive\/2023\/03\/silicon-valley-signature-bank-collapse-regulator-culture\/673423\/<\/a><\/a><\/p>\n

3. <\/span>“What Silicon Valley Bank Collapse Reveals About Regulation” ProPublica, 17 Mar. 2023, https:\/\/www.propublica.org\/article\/silicon-valley-bank-failure-fdic-fed-failure<\/a><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Silicon Valley Bank\u2019s spectacular collapse last week has left many bank customers with an all-too-familiar question: Is my money safe?[0]<\/a><\/sup> The Federal Deposit Insurance Corporation (FDIC) took control of the bank in the second-largest bank failure in US history, and the Federal Reserve Board promised to protect all depositors, up to the $250,000 insured by the FDIC.[1]<\/a><\/sup> But the failure of the bank has raised broader questions about the health of the financial sector, and why the FDIC stepped in when it did.<\/p>\n

Management of SVB is primarily responsible for the disaster.[2]<\/a><\/sup> Regulators should understand that they are in place because bankers are often tempted to take risks.[2]<\/a><\/sup> Bankers often attempt to expand rapidly, acquire loans at low interest rates, lend money liberally, and secure their investments for extended periods in the pursuit of higher yields.[2]<\/a><\/sup><\/p>\n

As early as last November, one journalist had noticed the increasing risks that banks, including Silicon Valley Bank, were facing; the head of the Federal Deposit Insurance Corporation had also cautioned about the dilemma.[2]<\/a><\/sup> Some short sellers began to take a bearish stance on the bank’s stock.[2]<\/a><\/sup> The irresponsible behavior of bankers and a lack of oversight from regulators have culminated in a severe financial crisis, leading to a government bailout. Regulators have vowed to be more vigilant in the future, although this is a promise that has been heard before.[3]<\/a><\/sup><\/p>\n

For most of the year, Silicon Valley Bank had not had a chief risk officer, which was far from ideal.[2]<\/a><\/sup> Jeff Hauser, the founder and director of the Revolving Door Project, a D.C. nonprofit that follows the regulatory sector, informed me, “Regulators had to be aware of this, and it has to be significant.”[2]<\/a><\/sup> Once we regard success as a sign of intelligence, it becomes difficult for a lowly bank examiner to express that “This institution does not have an individual in charge of risk management and does not have a strategy to handle the risk associated with its assets.”[2]<\/a><\/sup><\/p>\n

Regulators of banks possess incredible authority.[2]<\/a><\/sup> A bank’s operations can be examined and changes can be demanded by them.[2]<\/a><\/sup> They rarely solve the problem.[2]<\/a><\/sup> Chris Whalen, a long-time financial analyst, informed me that the regulators are comparable to all of the conflicted agents in the ratings agencies and other fields.[2]<\/a><\/sup> In prosperous times, they go along with the tide; however, in difficult times, they fail to deliver.[2]<\/a><\/sup><\/p>\n

0. <\/span>“Here’s who made money amid the Silicon Valley Bank turmoil” ABC News, 17 Mar. 2023, https:\/\/abcnews.go.com\/Business\/made-money-amid-silicon-valley-bank-turmoil\/story?id=97877087<\/a><\/a><\/p>\n

1. <\/span>“Congressman discusses why Silicon Valley Bank failed – San Jos\u00e9 Spotlight” San Jos\u00e9 Spotlight, 17 Mar. 2023, https:\/\/sanjosespotlight.com\/us-congressman-ro-khanna-discusses-why-silicon-valley-bank-svb-failed\/<\/a><\/a><\/p>\n

2. <\/span>“So Where Were SVB\u2019s Regulators?” The Atlantic, 17 Mar. 2023, https:\/\/www.theatlantic.com\/ideas\/archive\/2023\/03\/silicon-valley-signature-bank-collapse-regulator-culture\/673423\/<\/a><\/a><\/p>\n

3. <\/span>“What Silicon Valley Bank Collapse Reveals About Regulation” ProPublica, 17 Mar. 2023, https:\/\/www.propublica.org\/article\/silicon-valley-bank-failure-fdic-fed-failure<\/a><\/a><\/p>\n","protected":false},"author":3,"featured_media":2611,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[47],"tags":[],"_links":{"self":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/2612"}],"collection":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/comments?post=2612"}],"version-history":[{"count":0,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/2612\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media\/2611"}],"wp:attachment":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media?parent=2612"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/categories?post=2612"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/tags?post=2612"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}