Regional Bank Collapses Complicate Fed Outlook

Events last week provided a stark illustration of how the Federal Reserve’s planned escape from post-Covid inflation remains anything but straightforward.

The Silicon Valley Bank (SVB), a California-based regional lender that focused operations on venture capital firms and tech startups, was taken over by US regulators last week after it proved unable to cover mounting client withdrawals. The episode unfolded as a textbook bank run: as soon as there was blood in the water, withdrawals soared as high as $42 billion on Thursday alone, forcing management to liquidate the bank’s already paltry reserves.

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