Silicon Valley Bank collapsed
On March 10 California regulators suspended Silicon Valley Bank from trading. As shares plummeted, depositors rushed to withdraw their money. The Federal Deposit Insurance Corporation stepped in as the bank receiver. Holders with less than $250,000 in savings will have full access to their funds on Monday, March. 13, 2023.
The Silicon Valley Bank {SVB} is largest to fail in the US since 2008 when Lehman Brothers Inc. filled for bankruptcy in the 2007-2008 financial crisis. As a result of SVB bankruptcy, gold stocks traded up 0.7% while the price per ounce increased by 2% due to growing fears of contagion spreading throughout the banking system.
Photo source: www.gizmochina.com
What happened? SVB Financial is the parent company of Silicon Valley Bank {SVB}, which serves many start up and venture- capital firms. Due to lockdowns during the “pandemic” these companies generated a lot of cash. Pre “pandemic”, SVB ended the first quarter of 2020 with over $60 billion on deposit. After the pandemic deposits skyrocketed to $200 billion by the end of the first quarter 2022.
Bankers of SVB Financial bought long term assets with fixed interest rates for many years. As interest rates moved higher bank securities were worth less on the open market compared to their value on bank’s books. Like that, SVB losses were more than $17 billion at the end of 2022.
On Wednesday SVB sold bank securities worth $21 billion, at a loss of about $1.8 billion, in efforts to reset interest earnings and fund new lending. As share prices fell, customers tried to withdraw $42 billion of deposits, about a quarter of the bank’s total.
Top Institutional share holders are Vanguard Group, Inc. and Blackrock Inc., with assets totalling almost 20%.
Are we on the precipice another financial crisis or will the market recover? Time will tell, but we must understand that those who promised a great reset and a new world order will first need to bring the old system down. The banking cabal has utilized the so called “pandemic”, supply chain shortages and the conflict in Ukraine to obfuscate the great corruption and human trafficking world- wide which support the current financial system.
DB, CB
