Yves here. Gerald Epstein, who has written regularly about bank regulation and the inadequacy of “reforms” since the 2008 financial crisis, weighs in with his take on the 2023 panic. Epstein focuses on the tension between the Fed’s monetary and bank supervisory roles, and the colossal failure to coordinate them during the central bank’s very aggressive rate hikes. He also flags, among other things, the Fed’s failure to regulate and how deposit influxes made banks vulnerable to their reversal. Epstein calls for a major restructuring of the Fed, which despite being a logical response is unlikely to happen due to the central bank’s role as protector in chief of moneyed interests.

One related matter: the banks that got in trouble, particularly SVB, were bad at banking. One of the basic requirements of being in that business is managing your asset-liability mix and among other things, regularly stress testing for exposure

Keep reading this article on Naked Capitalism (Yves Smith) - Blog.

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