March 15, 2023 Global stocks and banking news

after the Silicon Valley Bank failed on Friday.its users They were full of fear. But as of Monday, they could breathe a sigh of relief — the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. The weekend said it would complete every customer.even more than $250,000 insured by the FDIC.

While this was welcome news for account holders, the unusual move raised questions for some, who wondered why the FDIC bent its rules for SVB and its customers.

Eric Krahn, a computer systems engineer from Iowa, asked the question during a CNN Prime Time event on Wednesday.

“Why are these banks and account holders given special treatment to make it completely complete?” he asked. “How does this affect confidence in our system?” CEO Lynnette Khalfani-Cox wondered the same thing, she said during the program.

“I think there’s a bit of moral hazard here,” he said, referring to the idea that banks may take on more risk if they think they’re going to bail out.More from my colleague Alison Morrow on this concept below).

Why did the FDIC make this decision? Khalafani-Cox said the federal government did not want the SVB failure to have a “domino effect”. “Federal regulators considered them to be in the systemic risk category, so they granted immunity.”

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