After a run of withdrawals, WaMu finally succumbed to failure on September 25. WaMu's share sunk further following the fall of Lehman Brothers on September 19. One week later, on July 22, WaMu posted $3.3 billion in losses. On July 14-seven months later-mounting concern over its balance sheets sent its shares down 35 percent. ![]() Here's how that rolled out: In January 2008, WaMu posted its first losses in decades as the subprime mortgage market began to collapse. SVB's failure is the largest since Washington Mutual's 2008 demise. These bank failures happened so quickly that we should re-examine whether regulators can still manage systemic risks to the financial system. And yet SVB is different in one way: The mixture of technology and quick-spreading beliefs fueled a crisis of unprecedented speed. Indeed, if you follow the insights of economists Carmen Reinhart and Kenneth Rogoff in their sarcastically titled book “This Time is Different,” financial panics over eight centuries have all developed around common features. America's first bank run threw the country into a financial panic in 1819. ![]() They happened so quickly that we should reexamine whether regulators can still manage systemic risks to the financial system.īank runs as a source of systemic risk are nothing new. It may be too early to tell if a system-wide crisis looms, or if these two banks were so concentrated in insular subsectors of the economy that the danger is contained.Įither way, though, the speed of these bank failures is raising concern-and for good reason. ![]() Treasury Secretary Janet Yellen went on TV to reassure markets. Sunday, regulators moved to close another, Signature Bank, citing systemic risk and a crisis of confidence and established the Bank Term Funding Program to shore up the financial system. Last Thursday and Friday, the decidedly modern Silicon Valley Bank succumbed to a very old problem: a bank run.
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