The crisis continues! Another US bank declared bankruptcy! Ranked third in history

The bank that went bankrupt is called Signature Bank, which ranks 22nd in the United States in terms of bank deposits. Yesterday, when the Federal Deposit Insurance Corporation (FDIC) took over Signature Bank, it announced that the bank's deposit balance was US$82.6 billion, ranking third in terms of the size of bank bankruptcies in U.S. history.

Compared with the previous bank that collapsed, Silicon Valley Bank, Signature Bank is only half the size, equivalent to a small provincial bank in China, such as Nanjing Bank. Although not as big as Silicon Valley, the collapse of Signature Bank shows a very important signal. The domino effect brought about by the collapse of Silicon Valley Bank has already come true. The second bank collapsed so quickly that it was only a weekend later.

Moreover, the collapse of Signature Bank was truly an innocuous situation. The bank's senior management revealed in an interview that after the news of Silicon Valley Bank's bankruptcy spread on Friday, a large number of customers, out of panic, came to Signature Bank to withdraw their deposits. In just one day, Signature Bank received more than 10 billion US dollars in withdrawal requests. The severe bank run directly defeated Signature Bank, which originally had no repayment risk, and made it the second bank to go bankrupt after Silicon Valley Bank.

This is just the beginning. We will definitely see more bank failures this week. Although the FDIC has created a $25 billion special financing plan for the banking industry, it is still a big question whether the banks that have collapsed one after another can be saved. And the root cause of the bank failures - interest rate hikes - has not stopped.

At present, the Fed's attitude remains unchanged and it is firmly on the path of raising interest rates. Most financial institutions predict that at the Fed meeting on March 21-22, it will still take an interest rate hike of about 25 basis points to ensure the suppression of inflation levels.

Yesterday, I analyzed that the interest rate hike is the fundamental problem of this bank crash. As long as the interest rate hike continues, small and medium-sized banks may go bankrupt at any time. Foreign media have called this banking industry crash a major collapse of the banking industry.

In response to the possible collapse of the banking industry caused by the interest rate hike, the Federal Reserve sent the FDIC to take over the bankrupt banks, and announced that this takeover was only to protect the interests of bank depositors, and the bank owners and investors were not taken into consideration. In other words, the bank went bankrupt, and the FDIC was only responsible for taking over the bankrupt banks and paying depositors' deposits.

With the Fed's announcement, at least depositors don't have to worry too much about their money. As for the impact on cross-border sellers, the Fed's suspension of interest rate hikes to save banks is more harmful.

The Fed's ultra-aggressive rate hikes that began last year were ultimately aimed at suppressing inflation and price levels. Everything from the vitality of the U.S. economy to whether consumers can buy an extra loaf of bread today is closely related to inflation. After a year of rate hikes, inflation has finally been suppressed a little, and U.S. consumption has also rebounded in January and February. Suspending rate hikes at this critical juncture will directly shake the optimistic expectations of U.S. consumers and the market for inflation, causing the market to tighten its purse strings again and reduce consumption, which will enter a vicious cycle and even make the Fed's achievements in raising interest rates last year fall short . The Fed's choice is obvious: to protect banks or the entire U.S. economy.