The US Department of Justice has opened an investigation to determine responsibility for the collapse of Silicon Valley Bank (SVB), one of the biggest bank collapses in the history of the country, according to the local press this Tuesday (14).
Sources at the Department of Justice and the US Securities and Exchange Commission (SEC) cited by the American press indicate that the investigations are in their initial phase.
The investigation is expected to focus on two senior managers at SVB, CEO Greg W. Becker and CFO Daniel Beck, for selling shares in the bank just a week before its collapse, according to information from The Wall Street Journal.
With a thinly diversified and highly interconnected customer base, the bank suffered a vertiginous deposit drain that on Friday forced regulators to step in and close the bank to limit the damage.
The panic spread to other institutions and on Sunday also hit the New York-based Signature Bank, which in recent years has been making a significant bet in the cryptocurrency sector.
After taking control of SVB on Friday and unsuccessfully trying to sell it to another bank, US regulators opted on Sunday to insure all deposits held by both banks, beyond the standard limit of $250,000 per customer, in order to contain the panic and allow the affected companies to continue operating.
The intervention of the authorities generated a strong debate in the United States on whether or not this constitutes a new bank bailout, as occurred in the 2008 crisis.
US President Joe Biden said on Monday (13) that the managers responsible for this crisis will lose their jobs and investors will not be protected: “They took risks consciously, and when risk fails, investors lose your money. That’s how capitalism works.”
Risk agency lights the alert
Risk rating agency Moody’s on Tuesday downgraded its rating of the entire US banking system from stable to negative due to a “rapidly deteriorating operating environment”.
“We changed our outlook on the US banking system from stable to negative to reflect the rapidly deteriorating operating environment following the withdrawals of deposits at Silicon Valley Bank, Silvergate Bank and Signature Bank and the failures of the SVB and SNY,” he added. to Moody’s in a report.
Despite the downgrade by Moody’s, bank shares rose on Tuesday on Wall Street, while the financial sector as a whole was up 1.92% in mid-session.
On Monday, Moody’s placed the long-term credit ratings of First Republic Bank, Intrust Financial, UMB, Zions Bancorp, Western Alliance and Comerica on review for downgrade.
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