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It's financial sector greed again

US and European regulators ignored basic risk management. But why do regulators allow financial sector firms to gamble with depositors' money?

Illustration: Binay Sinha
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Illustration: Binay Sinha

Jaimini Bhagwati
On March 27, the Silicon Valley Bank (SVB) was taken over by the First Citizens Bank (FCB), backed by considerable financial support from the US Federal Deposit Insurance Corporation (FDIC). A college friend asked me about what had led to the collapse of the SVB. The subtext of his question was that following the North-Atlantic financial Armageddon in 2008-2009, the additional US regulatory controls should have made such a bank failure impossible.
 
A summary explanation is that over the past several years regulatory red lines have been blurred in the US. For instance, the July 2010 Dodd-Frank Wall Street Reform
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper

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First Published: Mar 29 2023 | 9:46 PM IST

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