Congress and Regulators Must Learn from Silicon Valley Bank Collapse
WASHINGTON, D.C. — The California Department of Financial Protection and Innovation today closed Silicon Valley Bank, and appointed the Federal Deposit Insurance Corporation as receiver. In response, Bartlett Naylor, financial policy advocate at Public Citizen, issued the following statement:
“Silicon Valley Bank’s closure marks the second largest bank failure in U.S. history, just behind Washington Mutual’s collapse during the 2008 financial crisis. Large bank failures demand special attention from policy makers.
“Congress must hold public hearings to investigate the causes and implications. Among the issues to explore: How did the Dodd Frank Wall Street Reform Act mitigate any systemic repercussions? Did the special nature of the bank’s operations, including funding venture capital, play a role? Did specific accounting rules about realizing losses play a role? Should any rules that were eliminated or weakened under Trump’s administration be reinstated or strengthened? Should banks have more capital and fewer bonds?
“Banks fail, that’s an intrinsic part of capitalism. But when large banks collapse, we must learn from them or we risk a systemically unstable financial system.”
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