By Charlene Crowell –
Lawmakers seek answers and solutions to losses.
In 2023, “March Madness” took on a new meaning. Traditionally known as the nation’s premier college basketball competition, this year that moniker could also describe the madness that sprang from the closure of two banks with combined assets of $322 billion that affected consumers and small businesses in over 15 states.
Silicon Valley Bank (SVB), established in 1983, grew its operations to 15 states by 1996—from California to New York, north to Washington state, to as far south as Texas and Florida. In December 2022, its assets totaled $212 billion and the bank employed over 8,500 people.
But on March 8, in an attempt to improve its own liquidity, SVB instead incurred a $1.8 billion loss. The next business day, a run of bank withdrawals totaled $40 billion. And on March 10, SVB was forced to close and became the second-largest bank failure since Washington Mutual in 2008.
Similarly, Signature Bank, founded in 2001 as a commercial bank headquartered in New York City, grappled with its own problems that also led to a March closure. Signature Bank had 40 branches and 1,800 employees throughout the New York metropolitan area, Connecticut, North Carolina, California, and Nevada, in addition to its online banking services. In December 2022, the bank had assets of $110.4 billion and total deposits of $88.6 billion.
Only days after SVB’s closure, Signature, with heavy concentrations of investments in private equity ($28 billion in loans) and commercial businesses like cryptocurrency, experienced its own $10-billion run on deposits. With an estimated 90% of its deposits uninsured, according to Barron’s, Signature’s stock dropped 50%. On March 12, it was forced to close, and became the third-largest bank failure in the nation since 2008.
Many might wonder how costly bank failures could occur, given that…
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