The California Department of Financial Protection and Innovation released its report on the events that led to the March 10 failure of Silicon Valley Bank — but the remedies aren't fully clear.
The Silicon Valley Bank failure is the old story of what happens when short-term depositors want their money back from a bank with only long-term assets.The report said the department would “discuss with bank management what kind of social media monitoring a bank is conducting and how the bank intends to confront reputational and public relations concerns in the digital age.” It also promised to provide training to its bank examiners to better assess those risks.
“Wall Street is quickly realizing that the future of digital banking means bank runs can happen with a couple social media posts,” he said. “We live in a different world that will always have elevated banking run risk until more protections are put in place.”First Republic Bank plunged to a record low as investors sorted through rescue scenarios, none of which is likely to be good for current shareholders.
The bank also faced unusual risk since its deposit base was highly concentrated in the tech industry and 93.8% of its deposits, totaling $151.6 billion, were uninsured, the highest ratio of any large U.S. bank, the report said. The Federal Deposit Insurance Corp. insures deposits up to $250,000. Three days after the failure, amid concerns that the failure would start a widespread bank panic, the FDIC announced it would guarantee all of the bank’s deposits.
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