U.S. officials weigh protecting all deposits at Silicon Valley Bank
Extraordinary step eyed if plan to sell SVB to another institution fails. Lawmaker says Democrats are ‘praying for a buyer.’
https://www.washingtonpost.com/us-policy/2023/03/12/silicon-valley-bank-deposits/
……………………………………
Any decision to provide unusual assistance to SVB’s depositors would likely draw opposition. As discussions continued Sunday, some experts said that problems at the bank — and others like it — did not pose a threat to the U.S. financial system.
"I think it’s going to be hard to say that this is systemic in any way,” Sheila Bair, former head of the FDIC, said on NBC’s “Meet the Press.”
The bank’s collapse would cost its shareholders and could trigger economic problems for companies that kept large uninsured sums on deposit, said Anil Kashyap, a professor at the University of Chicago’s Booth School of Business. But that did not mean the broader financial system would be imperiled as it was during the 2008 crisis.
“This isn’t a systemic event. This is a midsize bank that was badly managed,” he said “It may be a little messy. But that’s different than if you have somebody at the core of the financial system stop making payments to somebody else at the core of the system and then the core implodes."
The U.S. banking system is highly concentrated, with the top five institutions holding almost $13 trillion in assets. Even if other banks that are comparable in size to SVB suffered depositor runs, the overall financial system would continue to function, he said.
……………………………………
