Friday’s collapse sent jitters through global markets and walloped banking stocks. Investors worry that the Federal Reserve’s aggressive interest rate increases to fight inflation are exposing vulnerabilities in the financial system.
Details of SVB’s failed response to the prospect of the downgrade, reported by Reuters for the first time, show how quickly confidence in financial institutions can erode. The failure also sent shockwaves through California’s startup economy, with many companies unsure how much of their deposits they can recover and worrying about how to make payroll.
The Moody’s call came after the value of the bonds where SVB had parked its money fell due to the higher interest rates.
Worried the downgrade could undermine the confidence of investors and clients in the bank’s financial health, SVB Chief Executive Greg Becker’s team called Goldman Sachs Group Inc bankers for advice and flew to New York for meetings with Moody’s and…
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