Silicon Valley Bank, First Republic, Credit Suisse: Tracking turmoil in the banking industry
Yahoo Finance Live’s Rachelle Akuffo discusses turmoil in the U.S. banking industry and recaps Treasury Secretary Janet Yellen’s remarks before Congress.
RACHELLE AKUFFO: Well, the banking sector has been grabbing the headlines this week as it navigates through several hurdles, including the collapse of multiple US banks. Now, we're taking a look down memory lane on all the key moments leading up to the current fragile state of the banking sector in this week's installment of What Just Happened. Now, it begins with Silicon Valley Bank when it proposed selling stock to raise additional capital, leading to clients pulling their money from the bank out of fear as depositors tried to withdraw $42 billion from the institution. Then Treasury Secretary Janet Yellen addressed the Silicon Valley turmoil on March 10 over concerns of SVB.
JANET YELLEN: There are recent developments that concern a few banks that I'm monitoring very carefully. And when banks experience financial losses, it is and should be a matter of concern.
RACHELLE AKUFFO: However, Yellen making note when convening with financial regulators that the banking system remains resilient. On the same day, Silicon Valley was seized by regulators along with Signature Bank over the same weekend in which regulators set a systemic risk exception, which allows the government to pay back uninsured depositors. At the start of the week, SVB depositors were given access to their money followed by investigations opening the next day on SVB's collapse.
And in the midst of the fallout of SVB in the US, overseas fears began bubbling over Credit Suisse. The worries of the Swiss bank's viability sent both regional and big bank stocks tumbling once again with shares of First Republic taking the worst beating, dropping 60% on March 13. The Treasury Secretary Janet Yellen once again reassuring the safety of the banking system in yesterday's remarks.
JANET YELLEN: I can reassure the members of the committee that our banking system is sound and that Americans can feel confident that their deposits will be there when they need them. This week's actions demonstrate our resolute commitment to ensure that our financial system remains strong and that depositors' savings remain safe.
RACHELLE AKUFFO: It wasn't long before First Republic was given a lifeline, receiving $30 billion in deposits from other banks, while Credit Suisse is set to receive a $54 billion loan from the Swiss Central Bank. However, the fallout of Silicon Valley Bank continues as its parent company files for chapter 11 bankruptcy.