Happy Saturday readers. I’m Phil Rosen. “Happy” is used loosely here, as the past week has been defined by chaos and uncertainty across the banking system. 

Silicon Valley Bank and Credit Suisse have stolen most of the headlines, but between others like First Republic Bank, Signature Bank, and Silvergate Bank, there’s plenty to digest. 

Today, I’ve rounded up everything that you need to know to get caught up on the worst banking crisis since 2008. 

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1. Credit Suisse was losing the faith of investors long before this week. The scandal-hit lender has been feeling the pain since Silicon Valley Bank sparked the bank crisis. Here’s a closer look on how it got to this point — and why so many investors are concerned about what happens next.

2. SVB’s collapse completely screwed things up for companies with bad credit. At the beginning of the week, the spread on junk-rated bonds relative to US Treasuries surged to the widest level since December. The bank’s failure has also eliminated a key source of funding for startups that would usually be denied by traditional institutions.

3. Venture capitalists have never been more divided, with accusations flying over who killed their beloved Silicon Valley Bank. VCs who have worked in the field for years told Insider that they couldn’t remember a time when there was so much infighting. One founder said that “it was an internet bullying thing that in 36 hours took down an institution that’s been vital to the industry for so many decades.”

4. Ray Dalio, the billionaire founder of Bridgewater Associates, sounded off on the financial turmoil. SVB’s downfall marks a “canary in the coal mine” moment that will have repercussions well beyond the VC world, in his view. He explained how history illustrates that the current economic cycle could see more firms selling assets at major losses — which is precisely what sparked this latest crisis.

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5. No one is cheering about the implosion of SVB, but there could be a silver lining. Scary uncertainty aside, the event might just be what triggers a bull-run in the stock market. Expectations are growing that the Fed will pause its aggressive interest rate hikes, and that would mean a reversal of the primary source of pain for equities.

6. The biggest bank failure since 2008 is everyone’s problem. There is a lot that’s still unclear as the financial world sifts through the wreckage, but the fall of Silicon Valley Bank will be felt for years to come. Here’s what the future could hold after the stunning collapse.  

7.  A popular real-estate tax loophole could be eliminated. Doing so could crush the market. That’s according to some experts speaking with Insider, who say that President Biden’s plan to do away with the 1031 exchange could cause property values to plummet. “Getting rid of the 1031 would decimate the market,” one source said.

8. A …read more

Source:: Business Insider


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