Silicon Valley Bank, America’s 16th-largest bank based in Santa Clara, California, collapsed last week after being forced to cash in assets due to a slowing tech sector.
This event became the second-biggest bank failure in US history after the collapse of Washington Mutual in 2008.
Three days later, Signature Bank, a New York crypto-focused institution, also fell.
On today’s Briefing, we speak to William Chittenden, an associate professor of finance and economics at Texas State University, to find out why the banks went under, who’s affected, and what happens now.
Listen now:
Mr Chittenden said one of the reasons behind Silicon Valley Bank’s collapse was that more customers wanted cash than the bank had available.
“Part of the problem for Silicon Bank was that they were focused very much on a single sector. In this case, the tech sector. And when that sector starts to experience problems, then the bank is going to experience problems,” he said.
Mr Chittenden said the Signature Bank was the third largest bank in the US. The failure of Signature Bank is different from Silicon Bank, and it was more related to the crypto industry.
“They make loans to those involved in the crypto industry. Those loans having issues being paid back really led to the failure of Signature Bank.”
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