There’s a common saying on Wall Street that’s often repeated during periods of high inflation and rising interest rates. It goes something like this: The Federal Reserve will raise rates—until something breaks.
Last month, that something was Silicon Valley Bank (SVB). The rapid collapse of tech startups’ favorite lender, along with fellow midsize U.S. banks Signature Bank and Silvergate Bank, led to instability in the banking system, forcing regulators to step in and rescue depositors. The crisis also ultimately put the final nail in the coffin of Credit Suisse, which had been ailing for years, forcing fellow Swiss lender UBS into a takeover.
