How to Think about the Silicon Valley Bank Collapse - TPM – Talking Points Memo:
The issue of bank regulation is always going to come to a fundamental trade off. If the federal government is going to backstop a bank’s holdings, it’s going to need greater regulatory oversight of the bank’s business. If a bank gets so large that its potential collapse endangers the whole economy (i.e., too big to fail) the federal government is going to need even more scrutiny and oversight of its operations. The entire push and pull over financial services regulation essentially comes down to the finance sector wanting less regulation (and thus riskier and more profitable investments) while still wanting the federal backstop or the feds to pick up the pieces if things go wrong. As the Times noted on Friday, back in 2018, President Trump signed a partial repeal of the 2010 Dodd-Frank financial services reform law, which reduced regulatory scrutiny for regional banks like SVB.
Greg Becker, SVB’s CEO, was a strong backer of the change.