2023-05-30T09:32:01-04:00May 30th, 2023|6- Client Memo|

How to Short-Circuit a Social-Media Run

Was the social media run Silicon Valley Bank’s kiss of death?  Its former CEO says so.  Regulators agree because the more the failure came from the great beyond, the less material their manifold supervisory mistakes.  But, while it’s true that managerial malfeasance and supervisory forbearance played a huge role in recent failures, social-media herds can still trample a bank flatter than a morning croissant.  FedFin outlined solutions shortly after the mid-March failures, but we didn’t then know what we also know now about investor runs.  This memo reviews the runs, updates the regulatory responses, and shows why new liquidity buffers – surely the least controversial of any pending proposal – are urgently needed before the next round of regional bank stress.