SVB collapse: Bank fallout shines spotlight on $620 billion hole in banking sector

Fallout from the Silicon Valley Bank collapse has directed attention to a $620 billion ticking time bomb in the banking system that has the potential to spell doom for the financial system. Eventually, SVB sold some of those assets, spooking investors and triggering a run on the bank. SILICON VALLEY BANK COLLAPSE: U.S. OFFICIALS REPORTEDLY WEIGH BACKSTOPPING DEPOSITORSThat hole illustrates why authorities at the Federal Reserve, the Treasury Department, and the FDIC were so eager to stave off contagion or panic spread from SVB's demise across the banking sector. But now, the Federal Reserve has begun jacking up rates in an effort to combat inflation, which has caused many of those assets to plunge in value. Taking note of the liquidity needs of banks, the Federal Reserve announced plans to offer banks a facility to help them meet depositor withdrawals Sunday.