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March 27, 2023

Fact Sheet: Federal Reserve Deregulation Caused the Failure of Silicon Valley Bank and the 2023 Banking Crisis

WASHINGTON, D.C.— Dennis M. Kelleher, Co-founder, President, and CEO, issued the following statement in connection with releasing a Fact Sheet entitled “Federal Reserve Deregulation Caused the Failure of Silicon Valley Bank and the 2023 Banking Crisis”:

“While the blame game and search for scapegoats have begun, the facts make clear that the Federal Reserve (Fed), with Chair Powell in the lead, are responsible in large part for the failure of Silicon Valley Bank (SVB) and the ongoing banking crisis as detailed in a Fact Sheet being released today.  Both were avoidable, and the causes are not a mystery:  once Trump took office in 2017, the financial industry was significantly unleashed, unsupervised, and unpoliced.  When that happens, the industry is incentivized to take excessive risks and engage in reckless if not illegal behavior because they get to enrich themselves by gambling with other people’s money.  The evidence for this is objective, overwhelming, indisputable, and publicly available, including as specifically applied to SVB and the current banking crisis.

“While the results of this irresponsible deregulation are only becoming visible now, they were inevitable, predictable and, indeed, predicted in detail in real time starting early in the Trump administration. Nevertheless, Fed Chair Jay Powell, former Vice Chair for Supervision Randy Quarles, and others massively deregulated the banks and gutted supervision, delivering the very banking crisis now happening in the country.  First, Powell began this in August of 2017 even before Quarles arrived at the Fed when he pushed a proposal that weakened the use of Matters Requiring Attention (“MRA”s) and even Matters Requiring Immediate Attention (“MRIA”s), now at the center of the SVB collapse.  Second, in September 2018, they also undermined supervision at SVB and elsewhere by de facto eliminating the use of guidance, empowering the bankers and tying the hands of supervisors.  Third, they also led the gutting of the Volcker Rule which enabled SVB to, among other things, increase investments in venture capital firms and sell its hedges in 2022 on $15.26 billion of its available for sale (AFS) securities for short term gains. That opened the gaping hole of unrealized and unhedged losses at SVB that caused the collapse and contagion that has required bailouts and inflicted widespread pain across the US. Fourth, those actions are just the tip of the Powell-led Fed’s deregulation juggernaut that caused this crisis, which are detailed in the Fact Sheet.

“That’s why if on-the-ground Fed supervisors failed at SVB or elsewhere, it’s because they were set up to fail by Powell, Quarles and others who undermined them and tied their hands, as detailed in the Fact Sheet.  Blaming others for the intended and foreseeable results of their actions would be nothing more than scapegoating much less culpable people for the knowing failures of the Fed’s leadership.  These facts also make clear why the Fed cannot investigate itself: no one working at the Fed, no matter how diligent and credible, is going to identify the current Chair as a leading cause of the collapse of SVB and the ongoing crisis no matter how overwhelming the evidence.

“Of course, none of the actions or conduct of the Fed, Powell, Quarles or other personnel from the Fed or any other regulatory agency in any way absolves the members of the Board of Directors or the executives and officers of SVB for their deficient conduct, gross mismanagement, irresponsible if not reckless or illegal conduct in connection with the collapse of the bank.  They, first and foremost, are responsible for what happened, and they should be held fully accountable by the Department of Justice, the SEC, shareholders, and regulators as warranted by the facts and circumstances.”

The Fact Sheet is available here.


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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