One of the banks that went into problems was also Signature Bank. Its CEO is also sued by shareholders for fraud, basically for withholding vital information.
On another front, SVB management has said to drop many shares. And that was right before the bank run.
And if that is not enough. Moody, a credit rating agency, has made some adjustments. For one, it put Signature Bank shares to "junk." But that is not news.
What is news is an "under review" status for several other banks because of a possible downgrade. The banks are:
- First Republic Bank,
- Zions Bancorporation,
- Western Alliance Bancorp,
- Comerica Inc.,
- UMB Financial Corp,
- Intrust Financial Corporation.
Basically, they are saying that these banks could have some problems. So they are reviewing them. To potentially downgrade credit status. Which basically means their status has already been downgraded on trust.
Will it stop here? Who knows.
There were rumors that Silicone Valley Bank's CEO was lobbying to make the rules more flexible. More flexible as in that his Bank would not be a "systemic bank." And hence would get less supervision attention from the government.
The leading theory was that it was a slow reaction time and mis-calculus. But due to the magnitude of the problem, I remain skeptical. It is most probably more than that.
I mean seriously. Did the treasury department of SVB use heavy Acid instead of coffee? These problems were very foreseeable. As a bank, you don't overexpose yourself to one financial medium. You split your eggs into several baskets. Max 10% in one basket. For god's sake, banks should be wise regarding money, shouldn't they?
And what does the crazy mind in me say? Well, there are some theories the collapse is also connected to the FTX drama. Reuters reports the issue of Signature Bank and FTX were somehow connected. At least some FTX victims claim so in a lawsuit.
And I wouldn't be surprised if SVB and FTX/Andromeda wouldn't be. In the modern world, everything is connected.
And Binance has more and more problems having transferred from traditional currency. USD transfers were already halted. Now GBP transfer seems to be also halting. The company is stating it is looking for alternative solutions.
It just shows how one day you are a kind of the financial castle and the next... You are just not. Await what will happen and try to calm investors with vague PR releases.
Bank shares all over the world have been very up and down. Mostly down. A lot is going on, so we will see if the actions of the US government will be enough. Enough to calm at least part of the investors, companies, and people receiving paychecks.