It is likely that more bank failures are coming after the collapse of Silicon Valley Bank. 
Commentators, politicians, and the markets are all warning of more pain in store. 
The speed at which SVB fell is a warning that these events can materialize in the blink of an eye. 

The dust is still settling following the collapse of Silicon Valley Bank, but there’s one thing that’s clear: more banks are probably going to fail. 

SVB’s operations were shuttered on Friday by the FDIC, which shortly after closed Signature Bank. While market commentators say the failures don’t mark a Lehman-style crisis, more bearish prognosticators say the risk of contagion across the banking industry remains high. 

In an interview with Politico on Sunday, former Federal Deposit Insurance Corporation chairman William Issac said more banks are bound to collapse, and markets could be on the precipice of another 1980s-style banking crisis. 

“There’s no doubt in my mind: There’s going to be more. How many more? I don’t know,” Issac said, comparing the situation to the banking crises of the 1980s and 1990s, when the FDIC dealt with the failure of over 1,600 banks. 

For further clues that there’s more pain to come, look to the market. Investors are clearly nervous about the potential for a cascade of bank failures, reflected in the stock price of a handful of regional banks on Monday. 

First Republic, PacWest, Western Alliance, and Charles Schwab are among the major names that cratered on Monday morning as investors grow anxious about banks’ ties to the tech industry or which may be sitting on large unrealized losses in their bond portfolios, two factors that catalyzed the fall of SVB. 

Trading in shares of Western Alliance were halted 20 times since March 10 due to spikes in volatility, according to NYSE data. PacWest trades were halted 11 times, and First Republic was halted 13 times in that timeframe. 

Biden, Yellen vow no bailouts

Though depositors have been made whole in both recent failures, banks and their shareholders should be prepared for the government to let them fail, and should not count on anything resembling a 2008-style bailout. 

That message was broadcast clearly by both Treasury Secretary Janet Yellen over the weekend, and by President Joe Biden on Monday. 

“Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out, and …read more

Source:: Business Insider


It’s crystal clear now: More banks are going to fail

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