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with comcast business mobile. the complete connectivity solution. from the company powered by the next generation 10g network. get started for just $49 a month. and ask about an $800 prepaid card. comcast business. powering possibilities™. >> despite a earnest efforts to contain the recent string of bank failures, another regional bank is said to be, quote, exploring its strategic options. shares of los angeles-based pack west bank fell more than 50% in after hours trading. and that came after the bloomberg reported the bank might be looking to sell itself, split itself up, or raise cash to save itself. -- rising interest rates have devalued its loan and bond holdings, prompting depositors
last panelist said biden is better for democracy. better for democracy is a democracy negotiating with divided power. david: that's a whole another kettle of fish. you mentioned the banks and first republic is essentially done that is going under receivership and fdic's going to be paying for. why is it tanking? and is it going to spread? >> the reason some of these banks like first republic and silicon valley bank have failed or are failing because of the spike in interest rates. they are holding onto bonds that had to retreat% interest rates but now the interest rate is 5%. the value of the bond holdings, the assets that the banks are holding and by the way i'm not to sound like i'm panicking but i do think you will see other banks in similar trouble if the fed has to continue to raise rates to bring inflation down. david: the mistake that they made bedding despite all the spending that we were talking about from biden that we could continue to spend and.
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able to handle the withdrawals. their clients, which were tech clients, were looking to take out their money and they were trying to sell these bonds that they had, their treasuries, which had fallen considerably in order to plug that hole. it wasn't working. a similar thing is happening in credit suisse. their clients are looking to withdraw their funds for different reasons. there is the same problems of the bond holdings that are not enough that will be able to plug that hole. there are concerns over liquidity. this is all the result of these high interest rates that we've seen. we've seen central bank in europe and the federal reserve hiking interest rate that historically fast rates. those concerns that have been lingering about, can the financial systems cope with this? starting to show there are some cracks now appearing in the system. there are some cracks now appearing in the system-— in the system. thank you very much for that. that's _ in the system. thank you very much for that. that's fiona _ in the system. thank you very much
so they drop, the value of bonds drop as a result. and what happened is that some of these banks, including silicon valley bank, actually bought a lot of these bonds, hoping to get a higher return over a longer period of time. but effectively, it used the deposits that its customers had put into the bank to try and make this return. and then when interest rates have spiked, it meant that their bond holdings were worth a lot less, but it still had to sell them anyway. and that's where then we saw this exodus of deposits, this worry that actually the bank could turn insolvent, which it eventually did. and the worry is that perhaps other banks are sitting on big unrealized losses. that's not a problem. if they don't have to sell them, they can hold them to term. it is a problem if they're forced to sell them because deposits are leaving and that is why there is so much nervousness around at the moment. and the worry is that actually, that could happen more particularly