Bank Collapse in U.S

Two banks collapsed after subsequent Fed Rate increase

Federal Reserve (Fed) raised its benchmark interest rate from nearly zero to 4.5% by February 2023.

SVB Bank Collapsed due to the withdrawal of funds picked up by its big customers 

Silicon Valley Bank used to place a majority of its funds into long-term Treasury bonds and mortgage bonds for security

Since major clients withdraw their deposits, SVB bank sold some of its distressed securities to provide the cash

Other major clients pulled their funds, the bank eventually collapsed

Silicon Valley Bank is the 16th-largest bank in the US,  was the second biggest bank failure in the US history.

As a domino effect, another 23-year-old regional commercial bank, Signature Bank collapsed soon after.

Big customers including JPMorgan Chase and Citigroup moved their deposits to larger banks. 

This is the third regional bank to collapse in few weeks. Silvergate Bank, Silicon Valley Bank, and Signature Bank

To restore confidence in the financial system, the FDIC took control of Signature Bank.    

All of the depositors of Signature Bank and Silicon Valley Bank allowed to withdraw their deposits

Is the banking crisis in US over now?

What Experts are Saying?

Darrell Duffie, a professor at Stanford's Graduate School of Business said, "At this point, it doesn't look like a broad spread crisis,"

Anat Admati, a professor at Stanford's Graduate School of Business said, "It's certainly a crisis because the bank wasn't considered systemic and all of a sudden it is considered systemic,"

Does the Banking Crisis in US will have spill over impact on rest of the world?

Credit Suisse Banks to Collapse Next?

Yet to See

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