Silicon Valley Bank bankruptcy: Joe Biden promises to put out the fire and punish those responsible


Joe Biden had, Monday morning March 13, accents which recalled Mario Draghi, the president of the European Central Bank, promising in the summer of 2012 to save the euro “whatever it takes”. “We will do whatever is necessary”, assured the President of the United States, in a morning address, and without questions, delivered at the White House. Objective, to reassure Americans and the financial markets by promising them that their bank deposits were safe, in the wake of the flash bankruptcy of Silicon Valley Bank, the bank specializing in venture capital (210 billion dollars in assets).

Faced with this bankruptcy, the largest since the financial crisis of 2008, the president wanted to be firm with the bank and another establishment specializing in cryptocurrencies, the New York-based Signature (118 billion dollars of assets). “The management of these banks will be fired”asserted Mr. Biden while adding that “Investors in banks will not be protected. They knowingly took a risk and when the risk did not pay off, investors lose their money. This is how capitalism works”. And to add his desire to find those responsible “In my administration, no one is above the law. » So many boasts to explain that the precedent of 2008 will not be applied, when the banking establishments had been saved and no bank manager had ended up in prison, with the exception of the crook Madoff whose fraudulent system had exploded.

“No one is above the law”

For now, the crisis is not over. The Fed’s measures did not prevent regional banks from plummeting on the stock market, whose listing had to be halted during the session and which lost an average of more than 12%. By the end of the day, First Republic, a San Francisco wealth management bank, had fallen 62%, despite receiving cash from the Fed and JP Morgan. It is followed by PacWest (California) and Western Alliance Bank (Arizona), down 45% or even Zions (Utah, −26%). Even Schwab, the cheap online broker, was down more than 11%.

Read also: Article reserved for our subscribers Silicon Valley Bank bankruptcy: the Fed puts $25 billion on the table to avoid a bank run

All eyes are on the inflation figure, which was due to be released Tuesday morning. No one believes that the Federal Reserve will now be able to raise its rates from 4.5% to 5% at the end of its March 22 meeting: this would add to the difficulties of the banks. If this figure is bad, the Central Bank will be trapped between its objective of stabilizing prices and its mission of stability of the financial sector.

You have 57.46% of this article left to read. The following is for subscribers only.


Leave a Reply

Your email address will not be published. Required fields are marked *