After a frenetic weekend of round-the-clock briefings, U.S. policymakers took the audacious step of guaranteeing all the deposits of the failed Silicon Valley Bank — even those exceeding the Federal Deposit Insurance Corporation's $250,000 limit
Bank Collapse Anxiety Before the Rescue
“Banks don’t just wake up and say: ‘Oh, there’s a problem with another significant bank and they’ve collapsed. Let’s just take it over,’’’ she said. “We were racing against the clock,” said Bharat Ramamurti, deputy director of the National Economic Council. The trouble started last Wednesday when Silicon Valley Bank said it needed to raise $2.25 billion to shore up its finances after suffering big losses on its bond portfolio, which had plunged in value as the Federal Reserve raised interest rates. On Thursday, depositors rushed to pull their money out. An old-fashioned bank run was underway.
His weekend would soon be consumed with phone and video calls focused on preventing a nationwide banking crisis. Regulators were so concerned, they didn't even wait until the close of business on Friday — the usual practice — to shut the bank down; they closed the doors during working hours. There were also fears, the official said, that if Silicon Valley Bank depositors lost money, others would lose faith in the banking system and rush to withdraw money on Monday, causing a cascading crisis.
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