Silicon Valley Bank News | Silicon Valley Bank Collapse

 It’s true that Silicon Valley Bank (SVB)didn’t get a bailout.

But Silicon Valley itself absolutely did.

Silicon Valley Bank Collapse Reason
Silicon Valley Bank Reason Of Failure

Here’s we are going to share actually what happened.

Silicon Valley Bank (SVB) is a bank for a bunch of Silicon Valley tech companies. in which Mostly Tech Companies used to kept their Deposits

It invested the deposits of Tech Companies Funds in mortgage-backed securities that go down in value when at the same time interest rates go up.

When the Federal Reserve increased the interest rates, and due the raised interest rates Silicon Valley Bank ran into trouble.

And another most important problem? It had a concentrated base of the depositors — tech companies who kept their Funds in SVB— their Capital needs also go up when interest rates rise.

These Circumstances created a double-whammy disaster for SVB.

It turns out a lot of tech companies who i deposited and parked their money at SVB did so without thinking very much about it — and used to made some horrendous decisions.

A well known tech firm "Roku", for Instance, deposited a staggering $487 million at Silicon Valley Bank.

The main Query is actually what should have been done about it.

Yelling ‘Fire!’

The normal rules and regulations of the road are clear: The 1st $250,000 are insured by the Federal Deposit Insurance Corporation (FDIC).

After that, the clients is liable for the loss.

But Silicon Valley Bank want to set a different set of rules for itself.

So Sunday March 12, 2023, Startup Executives and venture capitalists who stood to lose their Silicon Valley Bank deposits worked overtime to push the narrative there would be a bank run Monday if the bank’s uninsured depositors weren’t bailed out by the government Sunday.

Narrowly, the gambit worked: Treasury Secretary Janet Yellen Said in a statement that were announced on Sunday night that tech companies that deposited funds at SVB, even for those companies that parked far too much money there without diversifying, would be made whole.

Silicon Valley Bank crashed last week, leading depositors to withdraw savings on Monday.

That’s crony capitalism — Varying the set of rules after the fact to help a select few.

What is more? 98% of political donations from these bailed-out firms went to Democrats.

When President of America Biden talks about the bailing out “small-business owners,” most individuals do not have in their mind elite venture-funded firms in Silicon Valley bank.

Favoring the ‘elite’

It was sent a clear message by federal government to the American people: There are some more alternative set of rules if you are part of the favored class.

The Silicon Valley Bank hype machine proclaimed it was about making sure employees at the tech startups weren’t harmed.

But that’s mostly bogus, since many of companies’ business models are the similar today as they were a week ago.

If they’re viable, businesses could raise the capital from the similar venture capitalists who already funded them to fill the hole of what they’d lost at Silicon Valley Bank.

Treasury Sec. Janet Yellen and the Biden administration will try to protect companies affected by the crash

But that would include the equity dilution — that means the chief executive officers and other venture capitalists don’t make as much funds when a company becomes wildly successful.

That’s no basis for a bailout, so they pinned it to American workers instead.

Other texh founders and Venture Capitalists called me over the weekend to make the case that I should be the Republican candidate who stands up for “innovation” by recognizing that Silicon Valley Bank represents the cutting-edge of America.

Perhaps, but it’s no Cause to reward financial mismanagement.

Customers Will Pay

It’s a bailout, simple and pure. For years, Silicon Valley Bank and its cronies lobbied for looser risk limits by arguing its failure wouldn’t create “systemic risk” and wouldn’t need special intervention by the Unitd States government. Yet now the same cronies claim SVB was “systemically important.”

A honestly and friendly reminder that everyday Clients will have to shoulder the burden of this bailout through higher charges as they top up FDIC.

By selectively Varying the set of rules after the fact for Silicon Valley Bank, the United States government incentivizes greater risk-taking by depositors and banks in the future.

There are real concerns about a potential bank run in America, but the right way to address those concerns isn’t to bail out tech startups who banked with Silicon Valley Bank. 

It’s by taking basic and Primary steps, like the Federal Reserve doing 1 of the few things it is actually supposed to do — serving as the lender of last resort to American banks.

The deeper problem is that the Federal Reserve has been trying to play God for too long.

Except with a fat finger.

As president, I’ll put the Fed back in its place: Focus exclusively on making the dollar a stable unit of measurement.

Full stop.

That’s the 1st pillar to unlocking economic growth.

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