U.S. BANK REGULATORS HAVE SEIZED SILICON VALLEY BANK in Largest Bank Failure since the Great Recession of Dec 2007-June 2009.
It was hailed as one of ‘America’s Best Banks’ by Forbes magazine about a month ago at 20th rank among 100.
So what are actual reasons that it is FORCED to Close Down?
Let me give few main reasons!
FEDERAL RESERVE RAISED RATES:
Federal Reserve raised interest rates from record-low levels since last year to fight inflation spooked by Russia's Millitary Offensive in Ukraine. Advances suffered as Industry becomes wary of taking loans when money available becomes expensive due to higher rates & that too in backdrop of Economic Uncertainty.
SOME SILICON VALLEY BANK CLIENTS FACED CASH CRUNCH:
Higher interest rates forced market for IPOs to shut down for many startups & made Private Fund Raising more costly. Some Silicon Valley Bank clients started pulling money out to meet their liquidity needs as working capital started getting chocked.
SILICON VALLEY BANK SOLD BOND PORTFOLIO AT HUGE LOSS:
To fund redemptions, Silicon Valley Bank sold on Wednesday a $21 Billion Bond Portfolio consisting mostly of U.S. Treasuries. The portfolio yielded an average of 1.79%, much less than 10-year Treasury yield of 3.9%. SVB suffered loss of $1.8 billion in 1 single day.
SVB ANNOUNCED STOCK SALE:
To meet the losses & increasing need of LIQUIDITY, SVB announced sale of $2.25 billion in common equity to fill its Cash Pockets. Result? Its shares ended trading on the day
60%, as it sent signals of Wrong Financial Management. Short term liquidity needs must not be met with Long Term sources of funds. SVB did Exactly that!
STOCK SALE COLLAPSED:
Some SVB clients pulled their money from bank on advice of Venture Capital Firms such as Peter Thiel’s Future Fund throwing SVB in IRREVERSIBLE Cash Crunch.
FINALLY....Federal Deposit Insurance Corporation then announced that SVB was shut down & placed under its receivership.
And know this too that Nearly half of all US Venture Capital-backed Start-ups were involved with Silicon Valley Bank.
Is it the beginning of Next Great Recession? Probably Yes. US Economy is not at all in good shape. Liquidity, Inflation & Unemployment is hurting it in all nooks & corners.
And no-one else but President Biden & his MASTERS are to be blamed. Whether you WANT to agree or not....Fact Remains that.... US & Allies ABSOLUTELY DIDN'T NEED to push Russia into Millitary Offensive in Ukraine. World Economy is in tatters since then!
BUT YES....Ukraine is Winning War & Russia is Losing WITHOUT having to close a Single Business or Bank!!
That's what Western Media tells you & they can't be wrong because they have Liberal Privilege!!!