Cai Enze: Silicon Valley Banks bankruptcy catalyst

Cai Enze

From the Thunder to the bankruptcy, the Silicon Valley Bank, which has a history of 40 years, has closed the door for only more than 40 hours, becoming the second largest bankruptcy case in the American history, and the Washington Mutual Bank of Washington in the 2008 financial crisis.

In the past few days, the media chased.There is no doubt that the U.S. Federal Reserve's excessive interest rate hike policy is difficult to blame; Silicon Valley Bank CEO Greg Becker and other executive executives such as Silicon Valley Bank stocks have suspected of the realization of Silicon Valley bank stocks; the U.S. governmentThe poor supervision of retail banks, etc., are the reasons for the closure of Silicon Valley Bank.

However, the market panic is the catalyst of Silicon Valley Bank's bankruptcy.In this regard, analysts have omissions or lightwriting.

After three years of crown disease epidemic, consumers, including the majority of storeders, have become the birds with a stunning bow. With a little wind blowing, the panic will spread, like a bunch of dry firewood at all.The closure of the Lehman Brothers Bank directly triggered the global financial crisis 15 years ago. The most crazy pusher is the market panic.

Panic is caused by human factors. The panic psychology will create a tension atmosphere, enlarge the negative effects of the market, block the market channel that can be rescued, and fall into the intangible killer of the market.

For example, the management of a listed company reduced its holdings, causing panic in the stock market, and the same sector was implicated and plummeted; a corporate bond default payment caused the bond market panic and aroused bond selling tide;Tide and so on.

Although the forms are different, a common feature is that market panic can cause a large -scale loss of rationality, and even cause collapse. The risk impact is often beyond people's imagination.

Silicon Valley Bank's main business is to serve the financing, listing and merger business of Silicon Valley high -tech enterprises, and also accept a large amount of deposits of these emerging companies. It is the main financial industry, founders, startups, and employees in the United States.channel.A new technological innovation company with scientific and technological innovation provides financial support for it, so that the business of Silicon Valley Bank's business has taken advantage of the advantages of people and people at the beginning.

From the book, the Silicon Valley Bank before bankruptcy has not visible to debt. It is only due to the sharp decrease in business volume and other business volumes of startups during the epidemic, so the cash demand has fallen sharply.I played a little clever, and turned to a deposit that could not be loaned temporarily for the purchase of a large number of U.S. Treasury bonds in order to maintain value.

It is unknown that the Fed's radical interest rate hikes have reduced the price of government bonds and led to shrinking assets of Silicon Valley Bank.Some reserved households are worried that banks will not debt, causing panic and crowding.According to Silicon Valley Bank's financial report, as of the end of 2022, banks have $ 120.1 billion in investment securities.The financial report updated on March 8 showed that after the crowding, Silicon Valley Bank was forced to sell some securities in the investment portfolio at a low price, with a loss of $ 1.8 billion.If it is not for the squeezing tide, Silicon Valley Bank may not face the tragedy of bankruptcy.

It is the psychological psychological psychology of banks that cause excessive securitization of assets. They bet on a large amount of cash in the capital market and ignore the needs of the real economy and storeders, leading to liquidity obstruction and triggering market panic.This is the root of the problem.

Generally speaking, there are many reasons for panic markets: First, market supervision layers have launched market tightening policies or stock markets; second, major negative news dissemination; third, internal factors of technical levels; fourth, regulatory supervisionOrganization is negligible.

Therefore, improving psychological expectations and enhancing market confidence is the fundamental strategy to prevent and resolve financial risks.We need to learn lessons from Silicon Valley Bank bankruptcy, strengthen the guidance of financial institutions' own psychological expectations, and grasp the reasonable flow of liquidity.At the same time, it is necessary to guide consumers to establish confidence, soothe consumers through the coherent and persistent policies, and to prevent the panic of the wind and grass.

The author is a Chinese financial media column writer