The collapse of Silicon Valley Bank sent ripples through the banking world, causing stocks like Comerica’s to fall as investors looked to guard themselves against a potential domino effect.
The fast pace of interest rate hikes has stressed banks across the U.S., creating a higher risk of failure for them, said Gil Sadka, professor of accounting at the University of Texas at Dallas.
SVB was in a particularly bad spot as it was focused on the underperforming tech sector and purchased bonds, which have lost value with the interest rate hikes, Sadka said. The second bank failure that came over the weekend, Signature Bank, was focused on another struggling sector, crypto.
