Here’s what is causing problems for America’s banks

As investors attempt to predict the outcome of the collapse of Silicon Valley Bank, analysts are looking back to the Savings and Loans crisis of the late 1980s and early 1990s. S&Ls were similar to banks but specialised in receiving savings deposits and making mortgage loans. In the 1980s, they were deregulated and began to make risky investments with depositors’ money, which subsequently backfired. Many S&Ls failed, leaving the government to step in and release bailouts. Silicon Valley Bank’s collapse has led some to recognise similarities with this crisis. 
In the short term, the collapse of SVB will have significant side effects. Longer term though, regulatory change may come as a result. Since the S&L crisis, regulators have pushed banks away from short-term investments, such as the instruments that appear to have brought down Silicon Valley Bank. Analysts suggest that central bank policy is also due for revision, as continued hikes in interest rates by central banks could lead the US economy into a mild recession within the next year. 
Investors will be looking for clarity as to whether this latest episode is a small blip or the beginning of wider financial chaos, and they will be seeking guidance from past experiences. Silicon Valley Bank was the biggest failure of a US bank since 2008, and as analysts look at how the crisis may play out, it appears to be business as usual for the banking industry. Multiple sources highlight the fact that the Valley Bank focuses on technology, rather than real estate. 
Overall, the collapse of the Silicon Valley Bank appears to highlight the need for banks to be cautious in their investment approach and aware that long term stability is more important than short term gains. As regulators continue to enforce stronger regulatory practices, Silicon Valley Bank is likely to remain an outlier to the current trend.



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