Back to the Fed's actions: another week, another bank failure. The Fed bought First Republic Bank over the weekend and sold it to JP Morgan Chase. Treasury and the Fed has been telling us for weeks now that bank failures were an isolated issue, and that the banking system is stable.
Here's an
interesting contrarian article on that:
The fact is that regulators — including the Fed — have failed to keep the banking system safe. Banks depend on trust: depositors need to be confident that they can withdraw their money whenever they want. That has always been true. What has changed is the ease with which billions of dollars can be withdrawn in a nano-second online.
And this:
As the head of the government agency responsible for supervising SVB, Powell bears responsibility for the oversight failures that precipitated its collapse. Unlike the massive mortgage-lending fraud that caused the 2008 financial crisis (the extent of which became clear only years later, following numerous lawsuits and other legal actions), SVB’s lending seemed sound.
To be sure, even good lending can turn sour in the midst of a significant downturn, and suspicions of dubious activity inevitably arise when so much money is being held in uninsured low-interest accounts. But SVB’s problems were more prosaic, and any banking regulator worth their salt should have acted, especially when the regulator was the one creating the risk.