The people of Wall Street are now fearing that the sinking of SVB will raise the risk of recession in the U.S. markets. The wider market was holding up better expectations. A few investors are calling for the Fed and this is making higher interest rates drag down inflation which is slowing down the economy. 

Friday, March 10, 2023: SVB (Silicon Valley Bank), the second-largest bank in U.S history, crashes unexpectedly, leaving many users and corporations in hysterics. Signature Bank also collapsed which is the fifth largest bank in the United States. The Silicon Valley Bank needed to raise $2.25 billion for the balance sheet. The bank didn’t reach that limit so it crashed. 

Friday, March 10, 2023: The U.S. government FDIC (Federal Deposit Insurance Corporation) gains control over SVB. With these numbers it is making it the largest bank collapse since the 2008 financial crisis. 48 hours later the bank took a multi-million dollar loss. They had to cash out government bonds to raise money to pay depositors. The FDIC’s mission is to insure savings, checking accounts, money market accounts, and certificates of deposit in federally recognized banking institutions.

Sunday, March 12, 2023: The FDIC closes Signature Bank after a run on its deposits. This happened because customers were panicking after the melt down at SVB. The deposits were under systemic risk exception; the FDIC’s Deposit Insurance Fund can cover deposits that exceed $250,000, which are usually uninsured. Shareholders and certain unsecured debt holders were not protected. 

Wednesday, March 15, 2023: CS (Credit Suisse) tanked by 30%. Swiss authorities announced a backstop for the country’s second biggest bank. It calmed the waters for a while. Investors and customers were worried about the long term plan and its credibility. 

Thursday, March 16, 2023: FRB (First Republic Bank) was on the edge because of all the tension building in the market. U.S. Treasury Secretary Janet Yallen and the CEO of America’s biggest bank Jamie Dimon had a meeting where they drew up plans for a private sector rescue. The agreement was for a group of American lenders to deposit tens of billions of dollars into First Republic in order to save it. 

Sunday, March 19, 2023: UBS Switzerland’s largest bank agreed to buy CS, who is its biggest rival. It was an emergency rescue deal. 

This was a major takeaway, especially for those with deposit management and interest rates. The banks have affected the economy to fallout and cut the amount of money the lenders needed to hold in reserve.