Opinion | Evaluating demise of Silicon Valley Bank and role of ‘regulators’ WashTimesOpEd
Massachusetts Democratic Sen. Elizabeth Warren and other know-nothings immediately called for more regulation without apparently realizing that much of the problem was caused by the existing regulations and the regulators not doing their job.
Banks face a number of other risks, such as the loans they make may not be sound, and if a bank has too many loan losses, it will fail. Banks also have a mismatch in their portfolios in that many of their loans are for a long duration, but their deposits can be withdrawn at any time — that is, they lend long and borrow short. Bankers are always under pressure from their stockholders to increase profits, which means making riskier loans with higher interest rates.
After the 2008-2009 financial crisis, Congress decided to act to “improve” bank regulation, and in 2010, they passed the Dodd-Frank Act to promote financial stability, etc. — all in the name of protecting the consumer. One of the ironies of the current mess is that the co-author of Dodd-Frank, retired Rep. Barney Frank, a notorious advocate of Big Government, joined the board of Signature Bank — which also went under last week.
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