Commentary
The second-largest collapse of a bank in recent history after Lehman Brothers folded in 2007 could have been prevented. Now, the impact is too large, and the contagion risk is difficult to measure.
The demise of the Silicon Valley Bank (SVB) is a classic bank run driven by a liquidity event, but the important lesson for everyone is that the enormity of the unrealized losses and financial hole in the bank’s accounts would not have existed if it hadn’t been for ultra-loose monetary policy. Let us explain why.
As of Dec. 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits, according to its public accounts. The bank’s top shareholders are Vanguard Group (11.3 percent), BlackRock (8.1 percent), StateStreet (5.2 percent), and the Swedish pension fund Alecta (4.5 percent)….