Key Points:
Becker made this claim during his testimony before the US Senate Banking Committee on May 16, where he went into detail about how social media played a role in the bank run. He also stated that no financial institution could survive a similar situation.
Becker blamed the Federal Reserve’s interest rate hike from last year as the primary cause of the bank run. He described the interest hike as “the steepest rate increase over a 12-month period in almost 40 years.” Additionally, he claimed that the financial regulator’s messaging of “transitory” inflation lured the bank into investing its securities portfolios in the low-yield environment created by the Federal Reserve.
While admitting the high rate affected the value of some of SVB’s securities portfolio, he claimed that the bank still had government-backed securities and could have borrowed against them. However, he noted that rumors and misconceptions surfacing online that compared SVB to Silvergate Bank triggered the bank’s collapse. These rumors and misconceptions spread quickly online, leading to the start of what would become an unprecedented bank run.
Becker’s testimony revealed that the bank’s customers withdrew $42 billion in deposits within just 10 hours on March 9, and another $100 billion in deposits were requested to be withdrawn on March 10. Becker stated that this accounts for about 80% of the bank’s deposits. He also noted that he does not believe any bank could survive a bank run of that velocity and magnitude, which was “far beyond historical precedents.”
However, Becker’s claims contradict those of the authorities. According to regulators, SVB failed because of its mismanagement by the leadership team, the failure of Fed supervisors to address issues on time, and regulatory changes from the past administration. Despite this, Becker’s testimony sheds light on the pivotal role that social media can play in the collapse of a financial institution and highlights the importance of effective crisis management in such a situation.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
Join us to keep track of news: https://linktr.ee/coincu
Annie
Coincu News
Will Bitcoin Crash?" seems to be one of the most controversial questions, as the price…
There’s always that one coin people wish they hadn’t overlooked. For many, Cosmos ($ATOM) is…
Cosmos Developer Interchain Foundation sold 3000 ETH from its ICO today, totaling 21,600 ETH sold…
George Town, Grand Cayman, 22nd November 2024, Chainwire
Inflation Warning by Vanguard highlights risks during Trump’s term, citing tariffs and tighter labor markets…
Clanker token trading volume hit $59.8M on Nov 21, accounting for 14.75% of PumpFun. Fee…
This website uses cookies.