LIZ CLAMAN: How safe is YOUR bank Americans still DON’T know the full truth of the SVB panic

Welcome to the new reality of banking.

Forget ‘too big to fail’.

Events over the past week have revealed a new phrase being whispered on Wall Street:

“Too small to fail.”

In the past 48 hours, two banks – Credit Suisse and First Republic – received huge cash injections to stabilize their fundamentals, which began to shake and tremble after the collapse of two US regional banks, Silicon Valley Bank (SVB) last Friday and New York . York’s Signature Bank on Sunday.

Credit Suisse, a 167-year-old financial institution, received a $54 billion loan from the Swiss National Bank (SNB) – the Swiss version of the Federal Reserve.

Apparently, the SNB thinks that Credit Suisse, which ranks among the largest asset managers in the world, is too Swiss to fail, and that its collapse could send ripples across the entire financial sector.

Concerned, but fair enough. Credit Suisse is an international banking giant. But California-based regional bank First Republic is not.

Just before the close of trading on Thursday, the U.S. stock market skyrocketed on confirmation of a coalition of 11 U.S. banks — both large and medium-sized — hastily scraping together $30 billion and injecting it directly into First Republic’s aortic valve.

And if you think $30 billion is a lot, First Republic admitted late Thursday that it had already borrowed a whopping $109 billion from the Federal Reserve between March 10 and March 15 to stabilize operations.

Like other banks of its size, the bank was dealing with a wave of jittery depositors lining up to get their money out.

The initial panic broke out when SVB depositors and investors were shocked by the news that the bank had sold a large part of its assets at a huge loss. There was a crisis of confidence, more bank customers fled and SVB was taken over by American regulators. 48 hours later, in a case of debt by association, Signature Bank collapsed.

First Republic would have been the third bank in seven days to implode.

Okay, so what? And perhaps more importantly, for those of us unaware of the inner workings of the banking industry, why the urgency to stage an unprecedented rescue of it?

Well, a clearer picture is now emerging of the magnitude of the stress on the US financial system in the days following the demise of the SVB.

In recent days, banks have tapped into the Federal Reserve’s emergency lending program for a record $153 billion in 90-day loans.

The Fed’s discount window program lends cash injections to banks in urgent need of short-term liquidity. In a typical week, banks borrow only $4 to $5 billion from this program.

To put this historic money lending into context, the previous record for discount window lending was $111 billion during the 2008 financial crisis.

Despite this, Treasury Secretary Janet Yellen testified before the Senate Finance Committee on Thursday, just hours before announcing the bailout of the First Republic, that the US banking system is “sound.”

And here’s another very valid question: Why would seemingly healthy US banks ranging from JP Morgan to Wells Fargo to Citibank pour $30 billion of their deposits into a controversial bank with a market cap of just $6.2 billion?

Why the fear of First Republic?

Well, as we’ve seen when the herd turns, everything gets stomped in its path. And even the world’s banking giants are now worried that they, too, are at risk of being swamped.

One can’t help but wonder who else is lining up to drink from this firehose of bailout money and if the list might include banks where we have our money.

The Federal Reserve is not releasing the names of banks that have borrowed from the rebate window. But should they?

However well-intentioned, these steps to support the system are not guaranteed to save other banks that could teeter on the brink.

Some argue that disclosing to the world who else is suffering a cash crunch could fan the embers and spark an even bigger fire. So for now, we’re in the dark, which is an uncomfortable place to be.

The Federal Deposit Insurance Corporation (FDIC) insures all accounts up to $250,000. But developments in recent days have left many Americans wondering if their banks might be in trouble.

Shares of Credit Suisse and First Republic fell again on Friday and that can only mean one thing. While the bank is technically “stable,” investors are still not sticking around.

This past week has given us cause to worry that the recent cracks in the foundation of the banking system could actually be cracks the size of the San Andreas Fault.

If so, beware of the herd.

Liz Claman is the anchor of The Claman Countdown airs every weekday at 3 p.m./ET on FOX Business Network.