Beautiful Virgin Islands

Monday, Jun 23, 2025

Why Banks Are Failing And What Do You Need To Do Now

Why Banks Are Failing And What Do You Need To Do Now

So far three US banks - Silvergate Capital Corp., Silicon Valley Bank and Signature Bank - have collapsed.
The financial world hasn't seen a week like this since 2008, with turmoil in the banking sector igniting fears that the global economy is on the brink of another crisis.

For those who didn't experience the last financial crisis, the fast-moving situation can be confusing - and more than a little unnerving. Looking to catch up on everything that's happening? We compiled a guide to help readers get up to speed as the weekend arrives.

The news

So far three US banks - Silvergate Capital Corp., Silicon Valley Bank and Signature Bank - have collapsed. First Republic Bank, another large US lender, is teetering with its share price down more than 70% just this week. It plunged 33% Friday even after it received a $30 billion lifeline from its bigger peers on Thursday in an attempt to stem the turmoil. Analysts expect the uncertainty to continue to weigh on bank stocks.

Meanwhile, Credit Suisse AG, one of just 30 global financial institutions designated as being systemically important by the international Financial Stability Board, is facing a litany of problems.

Leaders of central banks across the world, from the Federal Reserve's Jerome Powell to the European Central Bank's Christine Lagarde, have assured the public that the recent turmoil does not herald a repeat of 2008.

But confidence in the global banking system has been shaken and things are still changing rapidly, with Credit Suisse reportedly planning to hold meetings over the weekend to assess various scenarios for its future.

What happened?

Silvergate was the first US bank to collapse, done in by its exposure to the flailing crypto industry. That meant investors were on edge when Silicon Valley Bank said it wanted to raise more than $2 billion to shore up its finances, and that it had sold a big chunk of its securities portfolio at a loss.

Over 40 years, SVB had become the bank of choice for the tech startup and venture capital world, riding the industry's boom to become the 16th-largest bank in the US. But news of its troubles created a classic run on the bank as depositors raced to withdraw their money. Ultimately, the Federal Deposit Insurance Corp. had to take control last Friday, making SVB the second-biggest bank failure in US history.

Signature Bank had also experienced massive deposit outflows as clients grew nervous about its exposure to crypto, which prompted state regulators to close the New York regional bank over the weekend. Billionaire investor Bill Ackman tweeted Friday that he expects Bank of America to buy Signature next week.

With a crisis brewing, US authorities announced a slate of extraordinary measures to backstop the financial system in an attempt to stop the panic from spreading. Still, San Francisco-based First Republic, which caters to the personal banking needs of tech's elite, got caught up in the contagion. Fears about the stability of regional banks caused depositors to move their funds to the financial institutions that are considered too big to fail, with Bank of America Corp. alone taking in more than $15 billion in new deposits in a matter of days.

It's not just the US - SVB's collapse has reverberated across the globe. Investors worried about the stability of banks launched a massive selloff in global financial stocks that wiped out $465 billion in just two days. Already embroiled in scandal, that loss in investor confidence sent Zurich-based Credit Suisse into crisis after its largest shareholder said it wouldn't add to its stake. Even after the Swiss central bank provided a lifeline, there are still plenty of questions about the future of the banker to the world's rich.

Why is this happening?

The Federal Reserve is attempting to cool down decades-high inflation by raising interest rates. In theory, hiking rates, which makes it more expensive for people and companies to borrow money, can pull the brakes on a hot economy and slow the pace of increasing prices.

High rates can also push the economy into a recession, and fears of a slowdown can force a reckoning in fast-growing sectors whose backers want to see a strong outlook for future growth. That includes the tech industry, which experienced a golden era buoyed by low borrowing costs and rapid growth during the pandemic.

The slowdown in tech hit SVB hard as its customers started withdrawing money. SVB was also hurt by higher interest rates on the asset side of its balance sheet: It invested billions of dollars in longer-maturity bonds, which lose value when rates go up. When SVB was forced to sell a big chunk of those bonds at a loss, it shook the confidence of its customers. In response, depositors, including prominent venture capitalist Peter Thiel, frantically tried to pull out $42 billion in a single day.

As it turns out, the Federal Reserve Bank of San Francisco had flagged interest-rate risk as a critical problem at SVB more than a year ago. The Fed has promised to investigate how it supervised the bank.

What does it mean for you?

The recent turmoil in the banking system has big implications that could change the calculus on consumers' financial decisions - and raises the risk of a recession. American consumers could face consequences such as reduced access to credit, changes to interest rates on deposits, or losses on investments, according to financial experts.

The collapse has also fueled anxiety from savers about the safety of their money. In the event that your bank fails, the FDIC secures up to $250,000 per depositor in qualified accounts at insured banks. For those with deposits that exceed that amount, we have some advice here.

At least in the short term, some analysts are predicting the Federal Reserve will pause its rate hikes. That would be good news for potential home buyers who have been crushed by soaring mortgage rates. However, it could also mean lower returns on high-yield savings accounts and other cash-like securities that investors have embraced this year.
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Starmer Invites Innovators to Join Government Talent Scheme
UK Economy’s Strong Opening Quarter Shows Signs of Cooling
Harrods Seeks Court Order to Secure Al Fayed Estate for Victims
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
WATCH: Israeli forces show the aftermath of a massive airstrike at Iran's Isfahan nuclear site
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
We have new information and breaking details to share about what is shaping up to be a historic air campaign tonight
Six Massive Bombs Dropped on Fordow; Trump: 'A Historic Moment for the U.S., Israel, and the World'
Fordow: Deeply Buried Iranian Enrichment Site in U.S.–Israel Crosshairs
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Pakistan to nominate Trump for Nobel Peace Prize.
BBC Demands Perplexity AI Immediately Stop Using Its Content
Telegram Founder: I Will Leave My Fortune to Over 100 of My Children
Political Turmoil Resurfaces in Belgium Amid Economic Concerns
Fed policymakers divided on timing of interest rate cuts
Trump signals imminent agreement with Harvard University
Inheritance tax referendum alarms Swiss billionaire community
Japan cancels bilateral security meeting amid US defence demands
AI skeptic Emily Bender warns that ‘the emperor has no clothes’
Israel Confirms Assassination of Quds Force Commander in Tehran
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
Plans to Sell Dutch Embassy in Bangkok Face Local Opposition
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump's $5 Million 'Trump Card' Visa Program Draws Nearly 70,000 Applicants
DGCA Finds No Major Safety Concerns in Air India's Boeing 787 Fleet
Airlines Reroute Flights Amid Expanding Middle East Conflict Zones
Elon Musk's xAI Seeks $9.3 Billion in Funding Amid AI Expansion
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Taiwan Imposes Export Ban on Chips to Huawei and SMIC
Israel has just announced plans to strike Tehran again, and in response, Trump has urged people to evacuate
Netanyahu Signals Potential Regime Change in Iran
Juncker Criticizes EU Inaction on Trump Tariffs
EU Proposes Ban on New Russian Gas Contracts
Analysts Warn Iran May Resort to Unconventional Warfare
Iranian Regime Faces Existential Threat Amid Conflict
Energy Infrastructure Becomes War Zone in Middle East
UK Home Secretary Apologizes Over Child Grooming Failures
×