{"id":423,"date":"2023-03-19T07:03:17","date_gmt":"2023-03-19T12:03:17","guid":{"rendered":"https:\/\/enjoyingthisjourney.com\/who-is-to-blame-for-the-silicon-valley-bank-debacle-examining-the-complex-role-of-bank-management-and-regulators\/"},"modified":"2023-03-19T07:03:17","modified_gmt":"2023-03-19T12:03:17","slug":"who-is-to-blame-for-the-silicon-valley-bank-debacle-examining-the-complex-role-of-bank-management-and-regulators","status":"publish","type":"post","link":"https:\/\/enjoyingthisjourney.com\/who-is-to-blame-for-the-silicon-valley-bank-debacle-examining-the-complex-role-of-bank-management-and-regulators\/","title":{"rendered":"Who is to Blame for the Silicon Valley Bank Debacle? Examining the Complex Role of Bank Management and Regulators"},"content":{"rendered":"

On March 14th and 17th, 2021, Silicon Valley Bank collapsed and caused a massive financial crisis, prompting the federal government to step in with a bailout.[0]<\/a><\/sup> But the question remains: whose fault was it?[1]<\/a><\/sup> Was it the bank's management, regulators, or a combination of both?[0]<\/a><\/sup><\/p>\n

Primary responsibility for the debacle lies with the bank's management, as bankers are always tempted to take risks.[0]<\/a><\/sup> But the role of regulators cannot be overlooked either. Regulators have awesome powers to go into a bank, examine its operations and demand changes, but they rarely do.[0]<\/a><\/sup><\/p>\n

The Trump administration's penchant for installing regulators who are opposed to regulation certainly played a role in the collapse.[0]<\/a><\/sup> Donald Trump appointed Randal Quarles as the first-ever vice chair of banking supervision at the Federal Reserve, and Quarles saw it as his mission to relax the post-financial-crisis regime.[0]<\/a><\/sup> Quarles supported the 2018 law to roll back stress tests, something that Becker himself had called for.[0]<\/a><\/sup><\/p>\n

This crisis raises the issue of how strange it is that the Federal Reserve regulates banks at all.[0]<\/a><\/sup> In the years leading up to the 2008-09 financial crisis, an alphabet soup of regulators ostensibly shared responsibility for banking oversight.[0]<\/a><\/sup> Financial institutions and institutions compared each other to find the most lenient terms.[0]<\/a><\/sup> Policy makers and legislators knew this and toyed with changing the architecture of banking-and-securities regulation, but ultimately, their only action was to close down the least of them, the OTS, and keep the rest.<\/p>\n

The causes of regulatory malfunction go beyond the measures taken by the Trump administration.[0]<\/a><\/sup> Regulators often hesitate to intervene, as this can cause unease among people, as well as require them to exercise their authority.[0]<\/a><\/sup> Ultimately, it is up to the Biden administration to make sure that this kind of financial crisis does not happen again.<\/p>\n

0. <\/span>“So Where Were SVB\u2019s Regulators?” The Atlantic, 17 Mar. 2023, https:\/\/www.theatlantic.com\/ideas\/archive\/2023\/03\/silicon-valley-signature-bank-collapse-regulator-culture\/673423\/<\/a><\/p>\n

1. <\/span>“Silicon Valley Bank's Distress Wasn't Reflected in Credit Ratings” The Wall Street Journal, 17 Mar. 2023, https:\/\/www.wsj.com\/articles\/silicon-valley-banks-distress-wasnt-reflected-in-credit-ratings-93cd9dff<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

On March 14th and 17th, 2021, Silicon Valley Bank collapsed and caused a massive financial crisis, prompting the federal government to step in with a bailout.[0] But the question remains: whose fault was it?[1] Was it the bank’s management, regulators, or a combination of both?[0] Primary responsibility for the debacle lies with the bank’s management, […]<\/p>\n","protected":false},"author":2,"featured_media":422,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/posts\/423"}],"collection":[{"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/comments?post=423"}],"version-history":[{"count":1,"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/posts\/423\/revisions"}],"predecessor-version":[{"id":424,"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/posts\/423\/revisions\/424"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/media\/422"}],"wp:attachment":[{"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/media?parent=423"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/categories?post=423"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/tags?post=423"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}