Has anyone seen a rebut of the idea that the SVB failure was caused by the roll back of Dodd-Frank? The collapse was caused by the drastic increase in Treasury interest rates from what I can see.
Discussion
It’s important to remember that raising interest rates did not cause the problem. A reversion to a more natural rate of interest elucidated the failure that already existed. Twenty years of falling interest rates, and the promise of further drops, enabled a 40 trillion dollar bond market to flourish, and for bond traders and banks to speculate with depositors’ funds because they didn’t anticipate any stress on the economy that would stop the music that enabled the ever-decreasing interest rates.
Then Covid came along…a stress on the economy. Then inflation came along…a stress on the economy. The Fed should increase rates, albeit much more slowly and naturally. Rates should never reach 0%, but should be around 6% to discourage speculation and excessive leverage.
Also, to blame economic failures on any president is short-sighted. Every president is a pro-banking president.
Dodd-Frank rollbacks are the design of the very banks that the policy is intended to reign in. Its amendment enables the investment arm of banks to commingle with their responsibility to protect depositors, and the very issues that led us to 2008 are again systemic.
Sanders is correct about Dodd-Frank, but Trump-blaming is click-bait for the Right. The same comments could and should be made about Obama’s contribution to the banking monopoly.
The lack of regulation over banks is not a right-left issue. Both parties are aggressively pro-bank and anti-regulation. At odds are the masses of people and the oligarchy who benefits from loose monetary policies.