Banks Behaving Badly

This latest AAII update is particularly relevant in view of the events of the past 10 days.  Plus it was in today's news that the CEO of SVB knew a month ago that they were in trouble and not only did nothing about it but sold millions of dollars of his own stock, so currently under investigation for insider trading.  

AAII Investor Update:  Banks Behaving Badly

Thursday, March 16, 2023

Dear Member,

Just four months ago, cryptocurrency exchanges and platforms went into a tailspin as FTX imploded. Now, banks transacting in real (as opposed to virtual) currencies are incurring problems. The very big difference is that bank, credit union and brokerage accounts are regulated and have insurance backstops. If your bank fails, you will be reimbursed, provided you meet the U.S. Federal Deposit Insurance Corp. (FDIC) insurance requirements and your account is FDIC insured. The same applies for credit union [National Credit Union Administration (NCUA)] and brokerage accounts [Securities Investor Protection Corp. (SIPC)]. I'll get into the trio of account insurance coverages in a moment, but first I want to address SVB Financial Group (SIVB), which owned Silicon Valley Bank, and Credit Suisse Group A.G. (CS).

Much Monday morning quarterbacking has been done over the past seven days regarding Silicon Valley Bank. I'm not going to rehash it. Rather, I'm going to address whether the average individual investor (and new self-proclaimed banking experts) could have determined if Silicon Valley Bank was veering dangerously toward the edge of a cliff.

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