Wednesday, March 15, 2023

Quotes on SVB: A Regulatory or Supervisory Failure?

Click here to read the original Cautious Optimism Facebook post with comments

TV guest comments overheard by the Cautious Optimism Correspondent for Economic Affairs:

Reporter: "Is it a foregone conclusion that we are now going to see more regulations? Maybe an expansion of the concept of SIFI to some of these larger regional banks?"

Answer: "Can I make a statement? There is nothing, absolutely nothing that the Federal Reserve, the FDIC, and the California Department of Financial Institutions could not have done to manage SVB. This is so simple to see what was in that company."

"You don't need anything from Congress to tell these people how to do their job. They failed to do a very simple job of insuring that there was diversification, particularly in this case, with interest rates [rising rapidly], to make sure this is a safe and sound bank."

-Richard Kovacevich, former CEO Wells Fargo 

(incidentally Kovacevich refused to take federal money during the 2008 financial crisis but was threatened by the Treasury Department to take it or else)


“Let’s be honest. Banking supervisors are nearly omnipotent when it comes to the banks they supervise. There’s no mystery. They can see everything. They can force banks to do whatever they want."

"They didn’t see this problem. I mean it was hiding in plain sight. It wasn’t like this duration mismatch was hiding under a barrel somewhere in the bowels of the bank. It’s very, very public, very open. It didn’t occur to the regulators that this is something we should be watching.”

-Pat Toomey, former US Senator (R-PA) and member of the Senate Banking Committee

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