One of the Americas largest banks has gone bankrupt leading to U.S. banks losing more than $100 billion in stock market value from Wednesday to Friday. Silicon Valley Bank a key tech industry bank has gone bankrupt in the United States after a wave of depositors wanted to withdraw their money in what is known as a run on the bank. This happened following concerns about the banks surprise filing that it had sold $21 billion in assets to improve its balance sheet. This led to a run on deposits on Wednesday night. This was one of the main banks for Silicon Valley backing technology companies and providing venture capital. This is the second largest bank failure in US history, after Washington Mutual’s collapse in 2008.
2008 All Over Again?
Silicon Valley Bank had around $209 billion in assets at the end of 2022 – coming second only to the $307 billion collapse of Washington Mutual’s 2008 collapse. Three other sister banks of the collapsed organizations are at risk. People began to actively withdraw money and deposits, which aggravates the difficult situation. The US Federal Reserve calls an emergency meeting. The fear is that such a collapse could trigger an American and a worldwide chain reaction as it did in 2008. Signature Bank with assets of $110 billion is also broke. Russian experts believe that the Silicon Valley bankruptcy is a planned action. Russian Economist Mikhail Delyagin is convinced that the bankruptcy of SVB is a deliberate act, as in 2008. “Now it is a blow of financial speculators dying for the financial wing of digital technology which is coming to replace it – fintech. A rearguard counter-attack, but the past is the past, so that we can strike painfully,” he wrote.
Banking Life Support System
The Federal Deposit Insurance Corporation banking’s life support system stated that it took over the SVB Bank on Friday and transferred all of its deposits to a newly-created bank. The FDIC further stated that “full access to insured deposits” should be available “no later than Monday morning.” However, they chillingly said that there is not enough money for everyone. Uninsured depositors will be given a receivership certificate for their funds. US Treasury Secretary Janet Yellen said she was “monitoring very carefully” how the situation affects other banks, according to the Wall Street Journal. “When banks experience financial losses, it is and should be a matter of concern,” Yellen told a House Ways and Means Committee hearing.
The Domino Effect
The Silvergate collapse came just before SVB in what could turn into a domino effect. It had served the cryptocurrency industry, while SVB was the bank for Silicon Valley tech start-ups. Just two days before SVB’s collapse, Silvergate collapsed. Silvergate was where most of the big crypto firms banked since traditional banks wouldn’t do business with the crypto industry. That was as a result of warnings from regulators who consider the crypto industry a high risk sector.
The Gap in the Market
Silvergate which was established in 1988 initially specialized in lending to industrial customers, also offering loans for residential and commercial real estate. In 2013, Silvergate began to court crypto firms due to a market opening where traditional banks were reluctant to do business. As a result, Silvergate filled the gap in the market and thus they became the crypto bank. Silvergate made its initial public offering in 2019, in a flurry of optimism, promising a complete refocus on the industry. As of Sept. 30, Silvergate had $11.9 billion in digital assets held as deposits. All went well for Silvergate until the FTX and Alameda bankruptcy on Nov. 11th which immediately scared customers away. The bank reported only $3.8 billion in digital deposits as of December 31st 2022. FTX had been one of Silvergate’s major customers.
Throwing in the Towel
On March 8th 2023 Silvergate said it intended “to wind down operations and voluntarily liquidate the bank in an orderly manner and in accordance with applicable regulatory processes.” It added: “In light of recent industry and regulatory developments, Silvergate believes that an orderly wind down of bank operations and a voluntary liquidation of the bank is the best path forward. The bank’s wind down and liquidation plan includes full repayment of all deposits. The Company is also considering how best to resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets.” The Silvergate throwing in of the towel was due to pressure from regulators and the US Department of Justice, which has opened an investigation into its business relations with the former crypto king Sam Bankman-Fried. Bankman-Fried who faces charges of 12 counts of fraud, following the collapse of his cryptocurrency exchange FTX and its sister company, Alameda Research.
Who is Next
The question is now which, or whether, other U.S. banks will fall? Could the SVB and Silvergate’s disease spread to other regional banks and turn into a banking pandemic since uncertainty and fear can turn into panic resulting in customers rushing to their banks to withdraw their money? “The U.S. banking system is on the verge of a much bigger collapse than 2008,” said economist Peter Schiff, known for his dire banking predictions. “Banks own long-term paper at extremely low interest rates. They can’t compete with short-term Treasuries. Mass withdrawals from depositors seeking higher yields will result in a wave of bank failures.”
It Couldn’t Happen Here
If we think it couldn’t happen here, weren’t we assured by the Irish Government that the Irish Banks were well capitalised and on a sound footing. Didn’t they keep telling us this right up to the intervention of the dreaded Troika. Well we all know what happened next. The Irish banks are in an even more precarious situation than they were in 2008 with no possibility of a bail-out this time. If and when they collapse, there will be a bail-in which means they will steal the depositor’s money to keep afloat. You have been warned.
The Great Reset
After all, didn’t Claus Schwab promise or threaten us all with a “Great Reset” meaning that as a result of his shenanigans and the governments compliance “you would own nothing and be happy”. That’s the euphemism for a corporate feudal takeover where you will be a compliant slave. Perish the thought. Corporate banks are not there to serve the community but to bleed it and everyone in it dry. Until we have Community Banks like they have in Germany and like we had in the 1960’s with the Cork Savings Bank and others of a similar nature we can expect nothing from corporate banks but robbery and busts.