The U.S. government announced late Sunday that it would guarantee all deposits at Silicon Valley Bank, which regulators shut down Friday. Officials also…
To cover uninsured deposits, federal officials first had to determine that the banks’ collapse posed a “systemic risk” to the financial system – something that could topple not just one or two banks but the industry more broadly.
And yet the nation’s top banking regulators determined that a systemic risk did exist, though they have not yet released an analysis demonstrating their findings. Approval of the measures required a two-thirds vote of the boards of the Fed and FDIC. Both the Fed and FDIC did so unanimously.Following SVB’s collapse, some financial experts have focused on a bank deregulation bill that Congress approved in 2018.
“Congress gave regulators permission to take their eyes off of these mid-sized regional banks,” said Phillips, the former FDIC attorney who is now at the Roosevelt Institute, a left-leaning think tank. “That debate really pushed banking regulation culture away from deep dive examinations into banks of this size and permitted them to get risky.”Article content
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