The tech industry's favorite bank is in full meltdown. On Friday, shares of Silicon Valley Bank (SVB) were in free fall, and trading was halted while the bank scrambled to sell itself after an earlier plan to recapitalize failed to stop customers from fleeing. By afternoon, California officials shut down the bank—and now it's fair to say regulators have some explaining to do.
For months, banking agencies like the Treasury Department and FDIC have been vilifying the crypto industry as a threat to the U.S. financial system, even as a much bigger problem was growing under their noses. That problem comes in the form of banks' large holdings of bonds and T-bills purchased during the environment of near-zero interest rates, and that they are now selling at a loss as customers pull their deposits.
