"Social media enabled depositors to instantly spread concerns about a bank run, and technology enabled immediate withdrawals of funding." "he combination of social media, a highly networked and concentrated depositor base, and technology may have fundamentally changed the speed of bank runs," Barr said in the report. The phenomenon is something that regulators need to note for the future, he said.
To meet capital requirements, the bank was forced to sell long-dated Treasury notes at a loss incurred as rising interest rates ate into principal value.īarr noted that SVB's deposit run was exacerbated by fear spread on social media outlets that the bank was in trouble, combined with the ease of withdrawing deposits in the digital age. In a stunning move that continues to reverberate across the banking system and through financial markets, regulators shuttered SVB following a run on deposits triggered by liquidity concerns. "However, outside a reference to possible tightening of executive compensation rules that may or may not be acted on, there are few big surprises here." The report "sets the stage for far-reaching re-regulation and tougher supervision of mid-sized banks," Krishna Guha, head of global policy and central bank strategy for Evercore ISI, said in a client note.
Personal Loans for 670 Credit Score or Lowerīank stocks were higher following the report's release, with the SPDR S&P Bank ETF up about 1.3%. Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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