Banks are teetering as customers yank their deposits. Markets are seesawing as investors scurry toward safety. Regulators are scrambling after years of complacency.
Fifteen years ago, the world careened into a devastating financial crisis, precipitated by the collapse of the American housing market. Today, a different culprit is stressing the financial system: rapidly rising interest rates. The sudden collapses of Silicon Valley Bank and Signature Bank — the biggest bank failures since the Great Recession — have put the precariousness of lenders in stark relief. First Republic Bank was forced to seek a lifeline this week, receiving tens of billions of dollars from other banks. And fears about the stability of the banking system hit Credit Suisse, the battered European giant.
But the storm had been quietly building for months.