Global bank stocks slump despite Biden reassurances
How did Silicon Valley Bank collapse?
Authorities on Sunday also took over Signature Bank in New York, which had many clients involved in crypto and was seen as the institution most vulnerable to a similar bank run.Mr Biden promised that covering the deposits would not cost taxpayers anything, and instead be funded by fees regulators charge to banks.
Paul Ashworth of Capital Economics said the US authorities had "acted aggressively to prevent a contagion developing". "In the US, bank stocks slid despite Joe Biden's pledge that 'whatever is needed' will be carried out to prevent more dominos from tumbling."The failure of SVB has re-ignited debates - similar to those seen following the 2008 financial crisis - about how much the government should do to regulate and protect banks.
"Building a culture of government intervention does nothing to stop future institutions from relying on the government to swoop in after taking excessive risks," he said. Both of the banks that collapsed - Silicon Valley Bank and Signature Bank - had the same thing in common: their business models were too concentrated in one sector and they were over exposed to assets whose values came under pressure from rising interest rates.
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