Financial deregulation led to the crash in 2008 and it could again in 2023. It’s time to make banking boring again
On Friday, bank regulators closed
In the early 1930s, such bank runs were common. But the Roosevelt administration enacted laws and regulations requiring banks to have more money on hand, barring them from investing their depositors’ money for profit , insuring deposits and tightly overseeing the banks.
Paulson asked Congress for $700bn to bail out the financial industry. He and Ben Bernanke, the Fed chair, insisted that a taxpayer bailout of Wall Street was the only way to avoid another Great Depression. Obama thereby shifted the costs of the bankers’ speculative binge on to ordinary Americans, deepening mistrust of a political system increasingly seen as rigged in favor of the rich and powerful.
Not surprisingly, Silicon Valley Bank’s own chief executive, Greg Becker, had been a strong supporter of Trump’s rollback. Becker had served on the San Francisco Fed’s board of directors. When the Fed rapidly raises interest rates, it must better monitor banks that have invested heavily in Treasury bonds.
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