Silicon Valley Bank Crisis: Last month, with the sinking of Silicon Valley Bank of America, the banking crisis started around the world. Now the Federal Reserve has prepared a review report to find out the reason for the sinking of this bank. According to this report, Silicon Valley Bank has sunk due to poor management, weak regulations and lack of government oversight. In the investigation report released on Friday, the Federal Reserve said that it is a major failure of the central bank that it could not properly assess the financial condition of the bank.
Not taking a tough stand is a big mistake
The Fed Reserve also admitted in its report that it had made a mistake in assessing the financial condition of the bank. In the last few years, with the growth of tech and startup companies, the growth of Silicon Valley Bank has also been rapid. There was growth in the bank, but along with it the problems related to it also increased. Despite this, the management of the bank did not pay heed to all these things and avoided taking a tough stand. Fed has also raised serious questions on SVB’s decisions on governance, liquidity and risk management. Despite not paying attention to all these issues, Silicon Valley Bank continued to get good ratings and this has become a major reason for the bank’s sinking.
Bank regulation will be made more strict
The central bank of America has talked about making rules to prevent such banking crisis in future. The Fed Reserve said that for banks whose total capital is more than $ 200 billion, the rules of regulation will now be tightened. Earlier in the year 2008, after the banking crisis, many major changes were made in the banking rules in America. Now even after the sinking of Silicon Valley Bank, the central bank is talking about making the rules more strict.
The bank was closed on March 10
Silicon Valley Bank mainly works for depositing and lending money to tech companies and startups. In early March, after reports of the bank’s deteriorating financial condition, there was panic among the customers. After this, there was a long line of people withdrawing money from the bank. In just a few hours, customers had withdrawn more than $10 billion from the bank.
In view of the financial condition of the bank, the bank was closed on 10 March. After this the Signature Bank of New York was also drowned. This banking crisis, which started from America, reached Europe, where the news of the sinking of Credit Suisse Bank of Switzerland also started coming. To save this bank, merger is being done with the country’s big bank UBS.
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