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marketsClosed Mar 10, 2023

Yellen Says Bank System Resilient Despite SVB Collapse

  • Silicon Valley Bank fails; FDIC appoints a receiver
  • California bank’s attempt to raise capital failed
  • Small US banks drop; KBW Bank Index sinks
  • Yellen says banking system remains resilient
Thank you for joining us. We’re going to wrap up our coverage now. Here are the five key takeaways from today’s coverage of SVB Financial Group:

  • SVB’s Silicon Valley Bank became the biggest US lender to fail in more than a decade. California state watchdogs took possession of the bank and appointed the Federal Deposit Insurance Corp. as receiver.
  • The takeover came after a tumultuous week that saw an unsuccessful attempt to raise capital and a cash exodus from the tech startups that had fueled the lender’s rise. The 60% slump in SVB’s stock Thursday -- its worst in more than 35 years -- came after the company sold substantially all of the available-for-sale securities in its portfolio, resulting in an expected $1.8 billion after-tax loss for the first quarter.
  • The Biden administration offered its assurance that the US financial system would weather fallout from the Silicon Valley Bank collapse and that regulators were closely monitoring developments. Treasury Secretary Janet Yellen said she had “full confidence in banking regulators to take appropriate actions in response,” adding that regulators “have effective tools” to address the situation.
  • Some banks are benefiting from startups that withdrew funds from Silicon Valley Bank. The chief executive officer of Mercury, Immad Akhund, tweeted that his “DMs + emails are going a little crazy” and posted a link for those seeking to open an account. First Republic Bank and Jiko are among other firms that startups, venture capitalists and their backers moved capital to, according to people familiar with the matter.
  • Fear of systemic risk ripped across markets this week, when investors who thought they’d survived the worst of Fed Chair Jerome Powell’s war against inflation suffered their biggest stretch of losses in five months. SVB’s troubles caused bank shares -- assumed to be redoubts of safety in a rising-rate world -- to lead the plunge, posting their worst week since the Covid-19 crash.