US Regulators Seize Silicon Valley Bank
What Happened
US regulators shut Silicon Valley Bank on March 10 after clients tried to pull tens of billions in a day. The FDIC took control, marking the biggest bank failure since 2008, and promised insured depositors prompt access to cash while looking for a buyer.
What It Means
A balance sheet stuffed with long-dated Treasuries met fast-rising rates and flighty deposits, exposing interest-rate risk hiding in plain sight. Funding stress quickly bled into regional banks, hammering their shares and forcing markets to price out further near-term Fed hikes.
What I Think
This is a reminder that liquidity can turn binary overnight. I expect supervisors to push banks to hedge duration and test runoff assumptions, while investors rediscover the difference between sticky retail deposits and concentrated tech cash. Panic rarely lasts, but the repricing of bank risk premiums will.
Market Terms
- Bank run spiral – Tens of billions in deposits fleeing in a day.
- Duration mismatch losses – Long-dated Treasuries eroding capital as rates rose.
- Regional contagion risk – Stress spreading to peer bank stocks.
- Fed path repricing – Markets yanking near-term hikes after the failure.
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