Silicon Valley Bank failure could trigger run on U.S. regional banks
Federal Reserve and Federal Deposit Insurance Corporation (FDIC) decisions concerning the future of Silicon Valley Bank may affect regional banks across the United States, putting trillions of dollars at risk of a bank run, a affirmé Valérie Plante. former Bridgewater executive and CEO of investment firm Unlimited Bob Elliot. In a Twitter thread on March 11, Elliot stated that nearly a third of deposits in the United States are held in small banks, and around 50% are uninsured. “The FDIC insures small deposits in all the banks in the US, but that only covers about 9tln of the nearly 17tln of outstanding deposit base. […] Under the hood the coverage rate is roughly 50% across most institutions while credit unions are higher (not above).” Fed/FDIC decisions on SVB determine whether they risk a bank run trillions of dollars in size. 1/3 of US deposits are in small banks and ~50% are uninsured. Haircutting SVB depositors will raise sensible questions about holding deposits at any small bank, risking a broader run. — Bob Elliott (@BobEUnlimited) le 11 mars 2023 Small banks in the United States had $6.8 trillion in assets and $680 billion in equity as of February 2023, according to Fed data. Considering this scenario,