May 2018: President Donald Trump signed the biggest rollback of bank regulations since the global financial crisis into law Thursday. https://www.cnbc.com/2018/05/24/trump-signs-bank-bill-rolling-back-some-dodd-frank-regulations.html https://www.washingtonpost.com/news/powerpost/paloma/the-finance-202/2018/11/01/the-finance-202-trump-era…
Which are responsible for SVB? Or was it just stupidity of management? Like no risk officer for 9 months? Obvious imbalance in assets versus likely demand. I’m not sure any regulation or lack is responsible.
Yes, agree very much, but we can't cherry pick what contributed. All of it contributed. Rollbacks gave banks more free rein, but they are ultimately responsible for reckless behavior. Kind of like what happens when you buy your teenager a brand new car or allow them to stay home alone on a weekend you're away. You hope they act responsibly, but...
Possibly, though I suspect the lack of some or other reg didn't do these fools in. I'd have to be a whole lot more conversant with the process by which bank risk is managed in fact by knowledgeable people and what additional latitude (if that is the right word) these regionals got with the rollback.
I think the obvious things are no risk professional in place at the beginning - the start of inflation and the uptick in Fed rates together with the greed in seeking higher returns for the flood of new deposits - brought on by the insane "zero interest rate" Fed policy for decades. I'd say reg rollback is likely a pale companion to those items. Occam's Razor it seems applies here. And it seems the Fed is squarely at the center of this: Created zero interest rate free only, failed, though the SF Fed Bank to properly supervise, and now the lender of last resort to the depositors (to the tune of hundreds of millions for single depositors!!!).
May 2018: President Donald Trump signed the biggest rollback of bank regulations since the global financial crisis into law Thursday.
https://www.cnbc.com/2018/05/24/trump-signs-bank-bill-rolling-back-some-dodd-frank-regulations.html
https://www.washingtonpost.com/news/powerpost/paloma/the-finance-202/2018/11/01/the-finance-202-trump-era-rollback-of-dodd-frank-leaps-forward/5bd9e0291b326b37e00b5a51/
Which are responsible for SVB? Or was it just stupidity of management? Like no risk officer for 9 months? Obvious imbalance in assets versus likely demand. I’m not sure any regulation or lack is responsible.
Yes, agree very much, but we can't cherry pick what contributed. All of it contributed. Rollbacks gave banks more free rein, but they are ultimately responsible for reckless behavior. Kind of like what happens when you buy your teenager a brand new car or allow them to stay home alone on a weekend you're away. You hope they act responsibly, but...
Possibly, though I suspect the lack of some or other reg didn't do these fools in. I'd have to be a whole lot more conversant with the process by which bank risk is managed in fact by knowledgeable people and what additional latitude (if that is the right word) these regionals got with the rollback.
I think the obvious things are no risk professional in place at the beginning - the start of inflation and the uptick in Fed rates together with the greed in seeking higher returns for the flood of new deposits - brought on by the insane "zero interest rate" Fed policy for decades. I'd say reg rollback is likely a pale companion to those items. Occam's Razor it seems applies here. And it seems the Fed is squarely at the center of this: Created zero interest rate free only, failed, though the SF Fed Bank to properly supervise, and now the lender of last resort to the depositors (to the tune of hundreds of millions for single depositors!!!).
Some good analyses out there. A bit over my head.
https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthew-s-levine