- Biden vows to protect SVB and Signature contributors
- And the US Federal Reserve will prepare a report on Silicon Valley by May 1
- But there are a couple of factors why it won’t work.
In the morning, we wrote about how Joe Biden helped the growth of the crypto market. He dispelled the fears of investors that after the bankruptcy of SVB and Signature, a massive crisis would begin. The president promised that savers would not be harmed and that the authorities would hold SVB and Signature accountable.
In turn, the Fed said that they would prepare a report on the problems of Silicon Valley Bank before May 1. This task will be taken over by Vice Chairman of Oversight Michael S. Barr:
However, other problems arise. The risk of a banking crisis still remains. Why?
- First Republic Bank shares fell nearly 60% ahead of the Wall Street opening. Perhaps this is another bank on the list of potential bankrupts.
- The more bankruptcies, the greater the risk of infection for other establishments. This is a self-fulfilling prophecy. In a panic, people run to banks and withdraw deposits, thus starting a cycle of bankruptcies.
- There is a strong possibility that poor risk management was not only the prerogative of the SVB.
- Many banks bought US bonds. And these bonds are losing value. Therefore, such banks may become victims of the outflow of deposits.
Meanwhile, Signature Bank board member Barney Frank said the authorities had ulterior motives for the bank’s liquidation. He called this decision a war against the crypto industry.
