The lightning-fast collapse of Silicon Valley Bank this spring laid bare an inconvenient truth: Some U.S. banks are not prepared to borrow from the Federal Reserve if they need to, and a Reuters analysis shows that problem is most acute among the nation’s smallest banks.
SVB, a top-20 bank with over $210 billion in assets at the time it failed, had an insufficient stash of collateral and in the year before it went down had not tested its access to the “discount window” through which the Fed doles out emergency loans. That “lack of preparedness may have contributed to the speed of SVB’s demise,” the Fed said in a review of the collapse published in April.
Read More : Insight: Some Small US Banks Not Ready for Emergency Borrowing from Fed