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It looks like the government has caused a fiasco in the banking industry in its pursuit of taming inflation via the raising of interest rates.
The failure of Silicon Valley and Signature banks were primarily caused by depositors demanding their money back. This also caused Credit Suisse to be sold to UBS under government auspices.
It looks like a key factor was the failure of the banks to raise additional funds to satisfy the run on deposits by their customers, an event exacerbated by social media. I’m not sure why these banks didn’t just refuse the depositor demands by at least limiting the return of deposits to at least $250,000.
If it’s not banking law, it should be. Even the biggest bank can’t survive the return of all deposits. Banks make money by the spread of interest rates of investments versus deposit interest. Money makes money.
Carlton Chang
Kaimuki
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