How should bank regulation change in the wake of Silicon Valley Bank’s collapse?
No limits
Last year, Marc Lasry, the owner of the Milwaukee Bucks basketball team, revealed that its star player, Giannis Antetokounmpo, at one time had been putting his money in 50 banks, with no single account holding more than $250,000. Why? Because Antetokounmpo wanted every cent to be insured by the Federal Deposit Insurance Corporation. And $250,000 is the cap on insured deposits.
What Mr. Antetokounmpo apparently didn’t realize — but was driven home with the collapse of Silicon Valley Bank last week — is that the deposit insurance cap’s days are over. True, the law says there’s a limit, and the government has to invoke a “systemic risk exception” to back uninsured deposits. But when a bank is on the verge of failing, the specter of systemic risk always exists.
“Ever since the S.&L. crisis in the 1980s, everyone gets
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