One Of The World's Biggest Hedge Funds Blames Social Media For Recent Bank Failures

Fortune: One of the world’s richest men knows why Silicon Valley Bank really failed: ‘People on iPhones’ 

Since the fall of Silicon Valley Bank, experts and market watchers have openly worried that the collapse of that institution, along with Signature Bank and Silvergate Bank, could lead to a contagion that would spread to the rest of the financial sector. 

But the CEO of a top private equity group doesn’t think that will happen because of the specific tech-based frenzy around SVB. “This crisis was caused by people on iPhones and other devices, hearing on social media that some bank might be in trouble,” Blackstone CEO Steve Schwarzman said in an interview with Bloomberg in Tokyo on Thursday. “They responded with huge withdrawals in a very short period of time, collapsing the bank.” 

Schwarzman, whose company manages $975 billion worth of assets, added that the current banking turmoil was unlike a “conventional crisis.” In SVB’s case, rather than holding risky assets, they had an imbalance of otherwise very secure bond assets that matured on a longer timeline. As the Fed hiked interest rates, the value of those bonds dipped, but would have been repaid in time if not for the bank run.  

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WNU Editor: Here we go again. Blame regular people for banks collapsing, and try to make the case why social media and free speech should be restricted/censored. Here is a heads-up. In the coming weeks Japanese banks may be the next major financial group facing problems that may need a bail-out.

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