Grim prognosis: Major US investment fund did not rule out more bank failures

Dawn Fitzpatrick, CEO of the fund investment soros, said Wednesday that he believes the US banking crisis is not over and more lenders are likely to fail. “I think there will be more bank failures, probably small banks“, he expressed in a conference organized by Bloomberg.

LThe executive said she expected incoming banking regulation to be “punitive,” with more scrutiny on lenders’ liquidity management.

How did the bankruptcy of US banks occur?

The run on deposits that affected the US banks Silicon Valley Bank (SVB) and Signature Bank generated fears of a generalized financial crisis in the northern country and a possible contagion effect in the world.

The bankruptcies occurred in the month of March and occurred as the cause of a significant explosion in the technology and cryptocurrency sector.

The first bank to collapse was Silvergate Bank, which announced closure on March 8 due to losses on its loan portfolio.

Following the collapse of Silvergate Bank, there was a bank run at Silicon Valley Bank, a bank that had lent large sums to technology startups.which caused Silicon Valley Bank to collapse and was swallowed up by regulators on March 10.1

Signature Bank, a bank that frequently did business with cryptocurrency firms, was shut down by regulators two days later, on March 12, with regulators citing systemic risks. The Silicon Valley Bank and Signature Bank collapses were the second and third largest bank failures in United States history, smaller only than the 2008 collapse of Lehman Brothers and Washington Mutual during the 2008 financial crisis.

In response to bank failures, the Board of Governors of the Federal Reserve, the Federal Deposit Insurance Corporation, and the United States Department of the Treasury announced in a joint statement that extraordinary measures would be taken to ensure that all deposits in failing banks were honored. In this way, the crisis was contained.