The recent failure of three regional banks has been front and center on our news screens. It has caused some substantial volatility in the financial markets, though not as much as you expected, given the circumstances. After all, it’s pretty rare for FDIC-backed banks to fail, but here we are.
And when three banks collapsed rapidly, it acted as a force multiplier in the public consciousness. Especially when one of those banks is as big as Silicon Valley Bank (SVB) — with $212 billion in assets as recently as the fourth quarter of 2022. SVB represents the second-largest bank breakdown in our Country’s history, behind only Washington Mutual’s 2008 collapse, so it’s hard not to harbor concerns that we may be on the cusp of another 2008-style financial meltdown.
But are those concerns justified? Is this saga we’re currently experiencing really a case of financial “déjà vu”?
To find out what distinguishes the recent decline of these three regional banks — Silicon Valley Bank, Signature Bank, and Silver Gate Bank — from the financial chaos that erupted some 15 years ago, and why their deterioration doesn’t signify the onset of a financial Armageddon, be sure and tune in to the newest episode of A Place of Possibility™. Richard Del Monte and Angela Wright will provide a clear-eyed overview of the factors that caused these three banks to fall.
We’ll be talking about:
- The business model that all banks use to generate profits. Contrary to what some believe, banks are “for profit” ventures and do
- need to turn a profit to stay afloat. We’ll explain how they do this.
- Why the three banks that recently fell were particularly vulnerable to interest rate increases because of their primary clientele.
- The relationship between interest rates and bond prices, and why longer-term bond prices are so sensitive to interest rate hikes.
- Dramatic financial events ultimately led to Silicon Valley Bank’s insolvency.
- The substantial differences between the circumstances surrounding the 2007-09 recession and our current situation.
- Some safe alternatives to brick-and-mortar banks that you should consider.
And more!
Most of us remember how the meltdown of 15 years ago seemed to start with just a few small missteps and then spiraled from there. But safeguards are in place now to prevent a repeat of that crisis and help keep the contagion of these most recent financial events to a minimum. So we’re confident that you’ll find this episode informative and reassuring and hope you’ll pass it along to your family, friends, and anyone else you think might benefit from it.
