Stephanie Ruhle: The precarious, political minefield laid before government officials in the wake of the Silicon Valley Bank collapse.
announced additional funding for other banks to address any needs of their depositors. But given these two seemingly positive developments, how come other regional bank stocks are suffering?
Despite the government’s backstopping Silicon Valley Bank, customers at other banks, especially at smaller and regional banks, are scared., customers at other banks, especially at smaller and regional banks, are scared. Today, we’re still seeing some of them pulling their money out and moving it to bigger and presumably, in their eyes, “safer,” banks.
While the government did step in to preserve deposits at SVB, that doesn’t mean it is guaranteeing all depositsAnd clearly, the Silicon Valley Bank rescue hasn’t entirely calmed the masses. Some bank customers may be taking the view that it’s easier to pull their money than to take risks that the government will step in and helpBank customers would obviously love it if every single deposit everywhere was guaranteed by the government.
The government could in theory make a permanent change and guarantee that more deposits are secure if banks fail. Congress would need to approve raising the cap above $250,000. But that would be a political hot potato.And while Silicon Valley Bank did have lots of small, mom-and-pop businesses, it also catered to venture capital behemoths. People are already angry at VCs and private equity firms that get the incredible carried interest loophole and save on their taxes.
Ultimately, executives at some of the other banks that are seeing their stocks plummet must be frustrated. They didn’t necessarily do anything wrong; they’re well capitalized and have no apparent issues with assets. But in this paranoid landscape, that’s not necessarily enough.Stephanie Ruhle is host of “The 11th Hour” at 11 p.m. ET on MSNBC and senior business correspondent for NBC News.
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