With the collapse of SVB, many commentators have echoed the dictum that no company is “too big to fail.”
Uncertainty has continued to plague active players in the US stock market with futures linked to major indices posting significant gains on Monday. Futures linked to the Dow Jones Industrial Average (INDEXDJX: .DJI) shed 276 points on top of a 0.9% decline.
Complementing the downtrend, futures linked to the S&P 500 Index (INDEXSP: .INX) were also down 1% and those linked to the Nasdaq-100 were down 0.7% at the time of writing. The losses being experienced are a reflection of the shock waves in the US banking sector and the fear of investors regarding the possible consequences.
Silicon Valley Bank (SVB) remains a top concern for many, as the company’s dissolution has disrupted the tech ecosystem it supports. The sigh of relief came after the joint statement by the Treasury Department, the US Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) on the status of SVB and how to move forward.
Regulators said they will not protect SVB’s shareholders with a bailout, but that bank depositors will be able to access their money from today.
“Today we are taking decisive action to protect the American economy by strengthening public confidence in our banking system,” the joint statement read.
The trio also said that a new financing program will be created to give banks and financial institutions the necessary liquidity that will be able to protect investor deposits. According to Treasury Secretary Janet Yellen, the type of bailout that was issued before the 2008 financial crisis has now stopped, as the government does not need to give incentives to companies that fail due to poor business decisions.
Cushioning the fall in stock futures: banks give guarantee
With the collapse of SVB, many commentators have echoed the dictum that no company is “too big to fail.”
In light of this, major banking giants like the Charles Schwab Corporation (NYSE: SCHW) have come out to reassure their shareholders that the company has solid liquidity to meet its retirement obligations. The bank said that while it is seeing outflows, customers are pushing funds into other aspects of the bank.
“Sweep cash outflows from customer banks in February were about $5 billion lower than in January and March-to-date average daily outflows are consistent with February,” the bank said. saying. “Importantly, these outflows reflect a continuation of customer decisions to reallocate a portion of their cash to higher-yielding cash alternatives within Schwab.”
In addition to Charles Schwab, all companies now provide guarantees to their customers across the board. Most notably, President Joe Biden is also commenting on the safety of funds in the US banking sector, fueling a targeted attempt to inject positivity that may help reverse bearish moves in stock futures.
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Benjamin Godfrey is a blockchain enthusiast and journalist who enjoys writing about the real-life applications of blockchain technology and innovations to drive mainstream acceptance and global integration of emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain-based sites and media. Benjamin Godfrey is a lover of sports and agriculture.
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