The financial world was rocked at the end of last week by the news that a California regulator had shut down Silicon Valley Bank. The bank was mostly patronized by tech companies and start ups and represents the biggest bank collapse since those in the Global Financial Crisis of 2008. Treasury Secretary Janet Yellen said the government would not be offering a bail out to the bank, though she said it would try and compensate the customers.
It is hard to say what this means since even the experts don’t seem to agree on what comes next. Some reports warn the closure would spawn a “contagion” collapse spreading through other sectors, including other banks and the housing market. Forbes reported that the panic was “overblown” but did concede that financial institutions will be in tricky territory while inflation remains high. One CEO said unrealistic profit projections added to the way inflation is hollowing out the value of bank investments means “some banks may not be as capitalized as they think they are”.
Rev. Fisk spoke about money and stewardship on last week’s Stop The White Noise show. As he reminded us, “Jesus has all the money”. We will not put our trust in princes, but pray to our Father for what we need to do good. As St. Paul reminds us, God did not spare his own son but gave Him up for us all. “How shall He not with Him also freely give us all things?”
A couple of good explainers of events leading up to the collapse for further reading (here and here).
See the biggest bank collapses in US history.