Part 5/14:
Bank Runs and Structural Weaknesses in the Banking Sector
Drawing attention to recent bank failures like Silicon Valley Bank, the speakers analyze the drivers—chiefly innovator oversight of interest rate risk and inadequate asset management. SVB's management doubled down on long-term treasuries, doubling their interest rate exposure. When depositors began withdrawing en masse, the liquidity crunch forced them to sell bonds at a loss. Their quick, managed liquidation averted collapse, but it spotlighted systemic vulnerabilities.