Banking sector drama drags on with SVB’s fate up in the air

Illustration: Gabriella Turrisi/Axios

The banking sector is poised to enter a third week of existential questions and instability despite official efforts to stabilize markets and reassure depositors.

In the meantime the search for reasons, lessons and blame is already well underway.

What we see: The fate of Silicon Valley Bank, whose financial fault lines spurred the recent banking earthquake, is still up in the air.

  • Its former parent filed for bankruptcy on Friday. The commercial bank – which was taken over by the US government last week – is not included in that process.
  • Another effort to sell the now FDIC-owned bank is underway after the regulator was unable to find a buyer last weekend.

separately, First Republic Bank investors are running…again. Shares were lifted Thursday by news of a $30 billion lifeline. But hours later, it announced it was suspending its dividend. The stock rose another 32% on Friday.

  • And Swiss giant Credit Suisse also failed to find a bottom for its shares, two days after securing its own $50 billion lifeline from the Swiss National Bank. The stock fell another 8% on Friday in Europe.

In search of reasons, President Biden took aim at executives today, urging Congress to pass tougher penalties for those overseeing failed banks, Axios’ Kate Marino writes.

  • The Fed, meanwhile, said Monday it intends to review whether there were any possible regulatory or supervisory missteps that led to SVB’s collapse, Axios’ Courtenay Brown writes. Its broad review of the bank’s failure is expected by May 1.

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