Week in Review: Who had Bank Crisis on their 2023 bingo card?
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Erstwhile high-flier Silicon Valley Bancorp was seized by the FDIC on Friday after an emergency cash raise failed to gain enough support. This was the biggest FDIC rescue in US history behind Washington Mutual. On Sunday, the New York State Department of Finance seized control of Signature Bank. It looks like Silicon Valley Bank got caught betting on interest rates going down and simply did not hedge the interest rate risk on its portfolio of MBS and Treasuries. One of the goals of monetary policy right now is to restrict credit, and I guess casualties like this are to be expected.
Week in Review: Who had Bank Crisis on their 2023 bingo card?
Week in Review: Who had Bank Crisis on their…
Week in Review: Who had Bank Crisis on their 2023 bingo card?
Erstwhile high-flier Silicon Valley Bancorp was seized by the FDIC on Friday after an emergency cash raise failed to gain enough support. This was the biggest FDIC rescue in US history behind Washington Mutual. On Sunday, the New York State Department of Finance seized control of Signature Bank. It looks like Silicon Valley Bank got caught betting on interest rates going down and simply did not hedge the interest rate risk on its portfolio of MBS and Treasuries. One of the goals of monetary policy right now is to restrict credit, and I guess casualties like this are to be expected.