Part 4/12:
With the Federal Reserve raising rates rapidly—from near zero to about 4.75% in less than a year—banks holding long-term bonds are facing losses. Deposit outflows are accelerating as customers seek higher yields elsewhere, such as money market funds. Silicon Valley Bank (SVB), for instance, experienced a run as startups drained deposits amid a venture capital drought. The FDIC’s intervention, insuring all deposits at SVB and Signature Bank, aims to prevent broader contagion but leaves equity and bondholders wiping out.