The Economy is Collapsing

The U.S rushed to seize the assets of Silicon Valley Bank on Friday after a run on the bank, the largest failure of a financial institution since Washington Mutual during the height of the financial crisis more than a decade ago.

Silicon Valley, the nation's 16th largest bank, failed after depositors — mostly technology workers and venture capital-backed companies — hurried to withdraw their money this week as anxiety over the bank's situation spread.

Signature Bank, one of the two big US destinations for crypto companies, has been closed by New York regulators. “All depositors of this institution will be made whole,” the Treasury, Federal Reserve and Federal Deposit Insurance Corporation said in a joint statement.

This is the third major bank that has fallen in the space of a week, and investors are spooked.

Fallout from the Silicon Valley Bank collapse has directed attention to a $620 billion ticking time bomb in the banking system that has the potential to spell doom for the financial system.

SVB's meltdown was partly caused by a chasm between its assets and what they were worth in the market. Eventually, SVB sold some of those assets, spooking investors and triggering a run on the bank. But SVB isn't alone, as banks across the United States were sitting on $620 billion in unrealized potential losses at the end of last year, per the Federal Deposit Insurance Corporation.

The trade deficit in goods shot up 17% in April to a six-month high of $96.8 billion, reflecting a rebound in imports and a broad decline in American exports.

The trade gap in goods rose from $82.7 billion in March, the Census Bureau said.

Larger deficits subtract from gross domestic product, the official scorecard for the economy.

The banks that showed some of the biggest deposit declines during the second quarter weren’t midsize regional lenders.

They were the industry’s giants.

JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C) and Wells Fargo (WFC) — the four biggest banks by assets — gave up a net $262 billion in deposits when compared with the year-earlier period. From the first quarter to the second quarter, customers pulled $62 billion from three of those banks.