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Ever since the 2008 implosion of the US financial system, Wall Street has been on tenterhooks for the next “Lehman Moment,” a triggering event named after the ill-fated investment bank that led to the broader crash of the banking system and the economy.
The latest alleged Lehman Moment occurred Friday with the crash-and-burn of Silicon Valley Bank.
With around $200 billion in assets, it’s the second-biggest bank collapse in history.
Bank stocks have been crushed in recent days, as traders and investors fret that losses by SVB are an indication of systemic risk spreading through the broader banking system, leading to a string of bank losses, some possibly collapsing, and then a recession.
Banks then stop lending, businesses recoil, the economy goes into the tank.
I say “alleged” because according to my sources this isn’t quite a Lehman Moment — at least not yet.
SVB’s slide into the abyss is a warning sign, they say, that we have trouble in the plumbing of the banking system built up through years of free-spending, i.e., money printing at the Federal Reserve and fiscal blowouts by the Biden administration.
As reported, the FDIC seized control of SVB on Friday as SVB headed to insolvency.
Its parent company, SVB Financial, is scrambling to find a buyer.
