Every top bank executive I speak to says the current troubles in the financial system could lead to something on the scale of what went down in 2008.
with a bank that grew exponentially in three years before it sank.
Again, don’t believe it. SVB’s CEO was on the board of his local Fed bank. Everyone who should have known what SVB was up to did. And by many accounts they were too busy making sure the banks they regulated lived up to ESG standards and embraced so-called social-justice remedies to care about SVB’s obvious risk taking.
Biden said the watering down of Dodd-Frank meant that SVB were spared the so-called stress tests that would have uncovered its weaknesses.Yes, FDIC insurance was supposed to protect smallish depositors like your aunt, not dice-rolling tech millionaires who banked at SVB and knew it was a risky business. Those tech millionaires either knew or should have known that a hiccup in the economy like rising rates could doom this bank and maybe others.
As I first reported last week, the big banks are now freaking out about another midsized bank also in San Francisco about to succumb to market forces named First Republic. They chipped in with $30 billion to stabilize the bank at least for the time being. That’s because I also hear the bank could be sold in the coming days to one of the bailout participants. The reason they’re doing this is not necessarily because they think First Republic is a great business — rather they’re seriously worried about economic contagion that policy makers have no clue how to handle.
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