GOP senators pushed to keep banking rules loose one week before SVB collapse

[RayGravesGhost]

https://finance.yahoo.com/news/gop-...e-one-week-before-svb-collapse-152706948.html​

GOP senators pushed to keep banking rules loose one week before SVB collapse​

The stunning events around Silicon Valley Bank of California and Signature Bank of New York come after years of moves in Washington to ease capital requirements on smaller and regional banks — including one that came just last week.

In a letter dated March 3 to Federal Reserve Chair Jerome Powell, Sen. Tim Scott (R-SC), the ranking member of the Senate Banking Committee, and nine of his GOP colleagues expressed concern that an ongoing Federal Reserve review may go beyond a 2018 law that eased regulations on smaller banks and “may unjustly increase capital requirements and have a chilling effect on market making activities and availability of financial services.”

The letter was timed to coincide with Powell’s testimony last week before Congress and referenced a 2022 speech from Michael Barr, the Fed’s vice chair for supervision, where he discussed the Fed taking a holistic review of capital standards.

The letter pushed back against ideas for increasing the buffer that banks are required to hold in reserve to guard against losses, arguing that banks “seem to have weathered the real-life stress test of the COVID-19 pandemic well.”

Within days, the banking sector saw the second- and third-largest bank failures in history.

 

[JimGaster]

U r a fool if you think anything other than reckless, out of control government spending is the root cause. Wokeness is a distant second…

 

[RayGravesGhost]

I've run a bank investment portfolio (+$20 billion)...have you? 🤣

They were invested MBS...the securities fall in value in rising interest rate environments...they were forced to sell the securities when their tech customers needed money...

Had NOTHING to do with government spending or ESG

 

[ghost_of_ukalum1988]

I've run a bank investment portfolio (+$20 billion)...have you? 🤣

They were invested MBS...the securities fall in value in rising interest rate environments...they were forced to sell the securities when their tech customers needed money...

Had NOTHING to do with government spending or ESG

IOW, the people running SVB and Signature Bank failed to understand the linkage between extreme levels of government printed money, inflation, and the necessity of the Fed raising interest rates. Maybe they were too focused on climate change and LGBQWERTY issues. Trump-era regulations had nothing to do with these failures.

 

[RayGravesGhost]

IOW, the people running SVB and Signature Bank failed to understand the linkage between extreme levels of government printed money, inflation, and the necessity of the Fed raising interest rates. Maybe they were too focused on climate change and LGBQWERTY issues. Trump-era regulations had nothing to do with these failures.

It has NOTHING to do with that..."the people" are bond portfolio managers

There's probably 1 or 2 people who run the investment portfolio and they don't buy bonds based on any political factors you mention

SVB bought MBS (mortgage bonds) and got caught when their venture capital customers requested large cash redemptions

SVB was forced to sell assets to meet the requests when the securities values were low

They got caught in a poorly managed liquidity trap

 

[ghost_of_ukalum1988]

It has NOTHING to do with that..."the people" are bond portfolio managers

There's probably 1 or 2 people who run the investment portfolio and they don't buy bonds based on any political factors you mention

SVB bought MBS (mortgage bonds) and got caught when their venture capital customers requested large cash redemptions

SVB was forced to sell assets to meet the requests when the securities values were low

They got caught in a poorly managed liquidity trap

What you say is generally true, but how is this fault of GOP senators as you state in your OP?

 

[ghost_of_ukalum1988]

Interesting editorials from the WSJ:

Opinion | Biden’s Bank Bailout Whoppers

The President offers assurances that markets don’t believe.

www.wsj.com

Opinion | The Silicon Valley Bank Bailout

The bill for bad policy comes due, but there’s risk in a second rescue of the banking system in 15 years.

www.wsj.com

 

[RayGravesGhost]

What you say is generally true, but how is this fault of GOP senators as you state in your OP?

I'm not saying the bank collapse was the fault of anyone besides the investment managers but the regulatory environment...in particular capital requirements & stress testing is what was being fought by the bank lobby because of the cost

The GOP has been fighting this ever since the Obama administration era and the last financial crisis

Well if you exempt smaller institutions then you raise the risk of something like this happening

So the GOP isn't responsible for the collapse...that's on the bank management

But arguing for a reduction of the measures to reduce the risk of this happening isn't the position you want to be responsible for either