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US officials preparing for ‘physical action’ to stop SVB contagion

BusinessCryptoUS officials preparing for 'physical action' to stop SVB contagion
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United States officials are working on “material action” over the weekend in an attempt to limit the ripple effect in the country’s banking system following the sudden collapse of a Silicon Valley bank on March 10.

According In a Reuters report citing unnamed sources, Joe Biden administration officials assessed the impact of the bank failure over the weekend, paying close attention to venture capital firms and regional banks.

“It will be a physical action, not just words,” a source told Reuters.

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Martin Gruenberg, chairman of the Federal Deposit Insurance Corporation (FDIC), during a speech on March 6 spoke About the risks associated with raising interest rates in the United States. “The current interest rate environment has had a dramatic impact on the profitability and risk profiles of banks’ funding and investment strategies,” he said, before adding:

“The aggregate amount of these unrealized losses, including securities available for sale or held to maturity, was approximately $620 billion at the end of 2022. Unrealized losses on securities have meaningfully reduced the banking industry’s reported equity capital.”

The “good news” about the billions in unrealized losses, according to Gruenberg, is that “banks are generally in a strong financial position.”

“On the other hand, unrealized losses undermine a bank’s future ability to meet unexpected liquidity needs. This is because the securities will generate less cash than originally anticipated, and because the sale often adds to regulatory capital. causes a shortage”

Silicon Valley Bank (SVB) could impact regional banks across the United States, putting trillions of dollars in bank runs at risk, Cointelegraph previously informed of, US Treasury Secretary Janet Yellen Working with regulators to address the collapse of Silicon Valley Bank And protect investors, but don’t consider a huge bailout.

According to Yellen, regulators are “very aware of the problems depositors have, many of them small businesses that employ people all over the country. And of course, that’s an important concern, and there’s a need to address these concerns.” working with regulators to

A Bloomberg report claimed that the FDIC Bank auction started on the night of March 11, As per reports, the bids are open for only a few hours, before the process closes this Sunday.