WASHINGTON, D.C.— Shayna Olesiuk is the Director of Banking Policy, issued the following statement in connection with the release of a new Report: “Report: Two Years After the 2023 Banking Crisis, Main Street is Still in Danger.”
“Two years ago, Silicon Valley Bank, Signature Bank, and First Republic Bank failed, caused a banking crisis, and got bailed out by taxpayers. These were three of the four largest bank failures in U.S. history and directly cost Americans more than $40 billion in bailouts, but really cost much more due to insuring uninsured deposits, contagion, credit contraction, and as much as 1% lost GDP. This resulted from, first and foremost, dangerously bad banking practices, egregious conduct, and failures of the banks’ executives and directors, as well as from multiple failures by regulators, supervisors, and policymakers. Unfortunately, few of those causes have been meaningfully addressed.
“What happened to spark the 2023 crisis, why it happened, and what to do about it are not mysteries. Those risks and causes were long-standing and well-known. During the first Trump administration, banking regulation and supervision were severely weakened. Regulation and supervision are meant to work in tandem to protect Main Street and American families from the dangerous activities of big banks and the inevitability of bank executives irresponsibly increasing risk which can lead to higher often short-term profits and large bonuses, while significantly increasing the risk of problems at a bank and potentially of a needed taxpayer bailout.
“The failures of 2023 must be used as a catalyst to make urgent changes to the banking system including:
- Improving and strengthening regulatory capital rules,
- Increasing and enhancing resolution planning,
- Adopting improved and enforceable corporate governance and risk management guidelines,
- Holding bank executives accountable,
- Increasing the impact of enforcement actions, and
- Eliminating ineffective supervisory guidance.”
The Report is available here.
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