Volatility in the Banking Sector
Last Friday, regulators in California took possession of Silicon Valley Bank (SVB), placing it under Federal Deposit Insurance Corporation (FDIC) receivership, following Silvergate Capital’s announcement that it was voluntarily shutting down its banking subsidiary’s operations and liquidating its assets this past Wednesday. Signature Bank could not withstand a barrage of deposit outflows and was shut down by regulators today. Is there something for investors to be concerned about here?
Bank runs are as old as banking and are usually caused by a loss of confidence by customers who seek to withdraw their funds en masse — herd psychology in action, with some modern banking twists.
In this video, Thomas Connelly, President, and Chief Investment Officer explains:
✔️ What caused the recent bank run on Silicon Valley Bank
✔️ Why the bank could not accommodate the withdrawal requests
✔️ Subsequent government and regulatory actions
✔️ Repercussions for depositors and investors
✔️ Thoughts on the financial system
Tom Connelly, CFA, CFP, is the president and chief investment officer at Versant Capital Management. He describes his most significant professional accomplishment as “the growth and preservation of my clients’ financial nest eggs and legacies over lifetimes through one or more recession events.”
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