Behind the bank disaster

Ralph Nader -  Once again, government socialism – ultimately backed by taxpayers – is saving reckless midsized banks and their depositors. Silicon Valley Bank and Signature Bank in New York greedily mismanaged their risk levels and had to be closed down. The Federal Deposit Insurance Corporation, in return, to avoid a bank panic and a run on other midsized banks went over its $250,000 insurance cap per account and guaranteed all deposits – no matter how large, which are owned by the rich and corporations – in those banks. Permitting such imprudent risk-taking flows directly from the Trump-GOP Congressional weakening of regulations in 2018, which was supported by dozens of Democrats, led by bank toady Senator Mark Warner (D-VA). That bipartisan deregulation provided a filibuster-proof passage by the Senate.

The other culprit is the Federal Reserve. Its very fast interest rate hikes reduced the asset value of those two banks’ holdings in long-term Treasury bonds, which reduced their capital reserves. With the “what, me worry” snooze of the California Department of Financial Protection and Innovation, S.V.B had little supervision from state regulatory examiners and compliance enforcers.