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Tips From the Pros: The Safety of Trust Assets Versus Bank Assets

Al W. King III discusses the differences in institutional risk as they pertain to banks, investment firms and trust institutions.

The banking crisis, headlined by Silicon Valley Bank (SVB), has created a lot of uncertainty regarding the safety of bank assets.1 During several years of extremely low interest rates, many banks placed deposits into long-term Treasuries to generate revenue. Once the Federal Reserve began rapidly raising interest rates, the economy weakened and capital dried up, which in turn forced an acceleration of bank withdrawals. SVB was forced to sell off some of its government bonds at

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