2 February 2024

Joe Biden had, Monday, March 13 in the morning, accents reminiscent of Mario Draghi, the former president of the European Central Bank, who, in the summer of 2012, promised to save the euro “whatever it takes”. “We will do whatever is necessary”, assured the President of the United States, in a morning address delivered at the White House. Objective: to reassure Americans and the financial markets, by promising them that their bank deposits were safe, in the wake of the flash bankruptcy of Silicon Valley Bank, a bank specializing in venture capital (210 billion dollars in assets).

Faced with this bankruptcy, the largest since the 2008 financial crisis, the president wanted to be firm with the bank and another establishment specializing in cryptocurrencies, the New York-based Signature (118 billion dollars of assets). “The management of these banks will be fired”asserted Mr. Biden, adding that “Investors in banks will not be protected”. “They knowingly took a risk, and when the risk didn’t pay off, investors lose their money. This is how capitalism works. »

He expressed his desire to find those responsible: “In my administration, no one is above the law. » So many boasts to explain that the precedent of 2008 will not be applied, when the banking establishments had been saved and no bank manager had ended up in prison, with the exception of Bernard Madoff, whose fraudulent system had exploded .

“No one is above the law”

The crisis is not over. The Fed’s measures did not prevent regional banks from plummeting on the stock market, whose listing had to be halted during the session and which lost an average of more than 12%. By the end of the day, First Republic, a San Francisco wealth management bank, had fallen 62%, despite receiving cash from the Fed and JP Morgan. It is followed by PacWest (California) and Western Alliance Bank (Arizona), down 45%, or even Zions (Utah, −26%). Even Schwab, the cheap online broker, was down more than 11%.

Read also: Article reserved for our subscribers Silicon Valley Bank bankruptcy: the Fed puts $25 billion on the table to avoid a bank run

All eyes are on the inflation figure, which was to be released on Tuesday morning. No one believes that the Federal Reserve will now be able to raise its rates from 4.5% to 5% at the end of its March 22 meeting: this would add to the difficulties of the banks. If this figure is bad, the central bank will be trapped between its objective of stabilizing prices and its mission of stability of the financial sector.

You have 56.91% of this article left to read. The following is for subscribers only.

Leave a Reply

Your email address will not be published. Required fields are marked *