The failure of tech-heavy Silicon Valley Bank (SVB) and the initial uncertainty over its causes led to public fear of contagion to other banks simply because of the raw numbers -- $212 billion in assets, including the high-dollar deposits of some of the most prominent tech start-ups. But the facts have started coming out, where the two biggest sins of SVB appear to be a heavy bet on long-term U.S. Treasury bonds until the Federal Reserve started hiking rates, and the delayed decision to shift away from them that triggered a run on the bank.
While they could be signals of the consequences of the Fed’s heavy-handed monetary policy, weak senior management at one bank and social media-enhanced panic in tightly knit Silicon Valley don’t seem to be credible ingredients for a global financial meltdown.
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