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Apparently, 3 US banks have gone under within a weeks time. The banks are Silvergate Capital, Silicon Valley Bank (SVB), and Signature. What caught my eye on this story is the SVB closure which was caused in large part by mass amounts of withdrawals. I thought banks were supposed to be able to cover all withdrawal requests?

Silvergate Capital, a central lender to the crypto industry, said on Wednesday that it would be winding down operations and liquidating its bank. Silicon Valley Bank, a major lender to startups, collapsed on Friday after depositors withdrew more than $42 billion following the bank’s Wednesday statement that it needed to raise $2.25 billion to shore up its balance sheet. Signature, which also had a strong crypto focus but was much larger than Silvergate, was seized on Sunday evening by banking regulators.
Source: CNBC

The cause for SVB's collapse is that many made a run on the bank... withdrew their money all at once:
The failure of Silicon Valley Bank was caused by a run on the bank. The company was not, at least until clients started rushing for the exits, insolvent or even close to insolvent. But banking is an enterprise that relies as much on confidence as on cash — and if that runs out, the game is over.

The collapse may have been an unforced, self-inflicted error: The bank’s management chose to sell $21 billion of bonds at a $1.8 billion loss, in large part, it appears, because many of those bonds were yielding an average of only 1.79 percent at a time when interest rates had risen drastically and the bank was starting to look like an underperformer relative to its peers. Moody’s was considering downgrading its rating. The bank’s management — with the help of Goldman Sachs, its adviser — chose to raise new equity from the venture capital firm General Atlantic and also to sell a convertible bond to the public.

It isn’t clear if the bond sale or the fund-raising, at least initially, had been made under duress. It was meant to reassure investors. But it had the opposite effect: It so surprised the market that it led the bank’s very smart client base of venture capitalists to direct their portfolio clients to withdraw their deposits en masse.
Source: The New York Times
[emphasis added]

And if I hear about all of the big boys withdrawing their funds in large numbers, you can bet that the little guy (like me) should be concerned. Apparently, the Feds have stepped in:
New York CNN — In an extraordinary action to restore confidence in America’s banking system, the Biden administration on Sunday guaranteed that customers of the failed Silicon Valley Bank will have access to all their money starting Monday.

In a related action, the government shut down Signature Bank, a regional bank that was teetering on the brink of collapse in recent days. Signature’s customers will receive a similar deal, ensuring that even uninsured deposits will be returned to them Monday.

“The Fed ring fenced the SVB disaster and averted a crisis of epic proportions for the banking sector,” said Wedbush Securities’ Dan Ives.”This was a much needed move to avert contagion on the banking sector and consumer confidence. That said the Street knows there is never just one cockroach and investors will be laser focused on other regional banks that need to possibly shore up capital.”

By guaranteeing the deposits, the US government is trying to avoid two potentially risky scenarios from the bank failure fallout, both of which could have dire consequences: Other banks with similar profiles to SVB and Signature could be next to fail if customers lose faith that they will have ample cash to fund their deposits. And the tech companies that kept their cash with SVB could collapse if they were unable to make payroll or fund their operations with the $250,000 worth of deposits per account that the FDIC insures.
Source: CNN

What I'm wondering now is if more banks will fail?

Also, should I be worried about being able to access my own hard-earned money from my bank? 🤔
 
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Here's a video reporting of SVB failure (edit: originally had a shorter vid. but I replaced with a longer but better one that goes over more detail)

Reading around today, it seems that some companies that held money in these banks could've also gone under if they couldn't access their funds to pay their bills and employees.
 
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Also, should I be worried about being able to access my own hard-earned money from my bank? 🤔
Only if you have more than $250,000 in any one account. And if you do, more power to ya! 😜

Banks use “fractional reserves,” I think it’s called, thinking that a run is mathematically remote. And as one of the reforms of the New Deal, the FDIC provides back up.
 
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Only if you have more than $250,000 in any one account. And if you do, more power to ya!
$250,000.00? Far from it. Even if I did it sounds like it would be best to divide it among different banks
 
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just don’t have too many accounts, or your just multiply the paperwork. Or these days, what you need to keep track of online! :p
Or maybe I'll convert my cash to gold. Go to an island some where and bury it. Might be safer than the banks nowadays.
 
Seems like US and European markets are still in panic mode. Dow market is down 600 points and CNBC reports several European banks have halted trading after steep losses.


European stock markets were sharply lower Wednesday, with banking stocks in deep negative territory amid the global Silicon Valley Bank fallout and more bad news for Credit Suisse.
Source: CNBC

With all these Banks having problems there is probably a financial contagion that's spreading here. Could just be panic.

Financial contagion refers to "the spread of market disturbances – mostly on the downside – from one country to the other, a process observed through co-movements in exchange rates, stock prices, sovereign spreads, and capital flows"

Things just don't happen like this. I bet you these Banks were already in a bad position for a while. Then after the economy got worse with rising costs and interest rates, that made it easier for them to run into even more serious problems and collapse. But I bet you those CEOs got their bonuses in.
 
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I bet you these Banks were already in a bad position for a while. Then after the economy got worse with rising costs and interest rates, that made it easier for them to run into even more serious problems and collapse.
Yes, I think something like this. Please don’t panic. I’d even say, Please continue to be optimistic. Compared to 2008, this thing is a Sunday picnic and a walk in the park.

PS I think you’re right about the bonuses. In a better functioning democracy, the legislature would pass laws to “claw back” some of these bonuses! 😀
 
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What I took from this book — stocks outcompete bonds in the longterm, don’t try to time the market. Buy and hold in an index fund.

Of course, YMMV, meaning Your Mileage May Vary. 🥴
 
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