The Better Markets team is closely following Silicon Valley Bank’s failure and the rapidly developing implications for our financial system. Below are key materials and coverage Better Markets has received during the past few days. You can also find our work in recent months that outlined the very issues that led to the bank’s failure and the resulting turmoil.
For our latest views and commentary check us out on Twitter:
Fact Sheet: Federal Reserve Deregulation Caused the Failure of Silicon Valley Bank and the 2023 Banking Crisis (3/27/23)
Statement on White House Steps to Hold Reckless Bank Executives Accountable: We applauded the effort to give regulators the tools to punish bank executives andcalled for more action to reverse Trump era deregulation (3/17/23)
Statement on Fed Investigation of SVB failure: The Fed cannot investigate itself for its own failures in connection with SVB. An independent investigation is necessary. (3/13/23)
Statement on Need for Accountability: We were encouraged by President Biden’s demands for accountability and asked it to take immediate action to hold bankers, regulators, and others who acted wrongly or failed to do their jobs accountable. (3/13/23)
Statement on SVB’s failure: As the news broke we warned of the possible contagion risks and the underlying risks created by the Federal Reserve in recent years. (3/10/23)
Fed Instability Report: While most of the current focus on the Federal Reserve (“Fed”) is around inflation, the big missing story is how the Fed’s actions have created many of the most significant risks and issues we face today. These risks played an important role in SVB’s failure. (1/17/23)
Capital Report: Our December report highlighted why capital requirements must be increased and the baselessness of industry talking points. The report flagged man issues directly related to the SVB failure. (12/22/22)
Top Media Coverage:
Bloomberg’s The Close – Dennis Kelleher on SBV and the Fed’s Investigation (3/13/23)
ABC World News Tonight feat. Dennis Kelleher – Stocks Tumble Amid More Bank Turmoil
CNN: Why banking fears just came roaring back (3/15/23)
“Today’s events show that there are numerous vulnerabilities of different sizes, degrees and locations in the US and global financial system,” said Better Markets CEO Dennis M. Kelleher. “These cascading events illustrate again that regulation and supervision of the largest financial institutions in the United States, and indeed the globe, continues to be insufficient, largely because of successful lobbying by the financial industry.”
ABC News: What to know about the Trump-era rollback of bank rules and Silicon Valley Bank’s demise (3/15/23)
“It reduced stress testing, it reduced collateral calculations, it reduced the supervisory stress test and it enabled them not to publicly conduct or report their own company-run stress tests,” Dennis Kelleher, the president & CEO of the nonprofit Better Markets, said of the 2018 law. “It blew a hole in several of the key financial stability protection rules.”
Associated Press: Fed criticized for missing red flags before bank collapse (3/14/23)
“It’s inexplicable how the Federal Reserve supervisors could not see this clear threat to the safety and soundness of banks and to financial stability,” said Dennis Kelleher, chief executive of Better Markets, an advocacy group.
NY Times: Was This a Bailout? Skeptics Descend on Silicon Valley Bank Response. (3/13/23)
“Crises don’t just happen — they’re not like the Immaculate Conception,” Mr. Kelleher said. “People take actions that range from stupid to reckless to illegal to criminal that cause banks to fail and cause financial crises, and they should be held accountable whether they are bank executives, board directors, venture capitalists or anyone else.”
LA Times Column: As Silicon Valley Bank’s red flags were flying, the Fed was AWOL (3/13/23)
The bank’s operations bristled with “screaming red flags,” Kelleher told me. These included a “hyperconcentration” of uninsured depositors from a narrow business sector — chiefly high-tech and biotech startups — as well as a dramatic mismatch between assets (that is, loans and investments) and liabilities (deposits) and the mounting tide of unrealized losses on its books.
Politico: Banks fought to fend off tougher regulation. Then the meltdown came. (3/12/23)
“SVB’s stunningly quick collapse should put an end to the nonstop attempts by banks, lobbyists and their political allies to weaken capital and other financial regulations that protect depositors, consumers, investors and financial stability,” said Dennis Kelleher, who advocates for tougher bank oversight as president and CEO of the nonprofit Better Markets.
Fox Business: How Silicon Valley Bank got burned (3/11/23)
“That’s why SVB is just the beginning. Contagion, likely more bank failures and various bailouts are almost certainly coming” Dennis M. Kelleher, co-founder, president and CEO of Better Markets wrote in a commentary. “While the immediate financial stability threats will materialize or be addressed, the underlying fundamental problems caused in large part by the Fed will remain and likely get worse.”
Yahoo Finance: SVB failure doesn’t threaten ‘safety and soundness’ of banking system: Analyst (3/10/23)
Dennis Kelleher, CEO of Better Markets, a non-profit that advocates for financial reform, said in a statement Silicon Valley Bank’s failure is going to cause contagion and more bank failures.
“SVB’s condition deteriorated so quickly that it couldn’t last just five more hours,” Kelleher said in a statement. “This was precipitated by Federal Reserve policies since the 2008 crash, but especially more recently due to the pace and amount of interest rate increases. …Banks simply didn’t have the time to reposition their balance sheets and portfolios.”