A key difference, however, is that in 2018 President Trump relaxed regulations, allowing banks to take on significantly more risks.
This is fast becoming one of those things that everybody know.
Despite – at least as far as I know – it not being true.
The size limit at which a bank enters the highest levels of regulatory inspection was raised at that time, yes. But that’s different from being allowed to take on more risk, no?
So, anyone got a proof that regs were relaxed to allow more risk? For bonus points, by Trump?
The 2007/8 crisis was, in large part, caused by Clinton-era legislation that *forced* banks to take on more risk
Everything his Trump’s fault. He was the joker in the bat cave when the Chinese vespertologists came calling.
Try Glass-Steagall.
1999.
Bill Clinton.
An Orange Man did it, and ran away!
@Dennis – exactly right and London’s “Big Bang” a decade or so earlier meant a similar bundling together of risks in single institutions that were better kept apart.
The big issue is not everyone knowing it’s true but it isn’t. The big issue is people not caring whether it’s actually true but, because they want it to reinforce other views they have which are equally groundless, repeating it not caring whether it’s true.
The real issue is people repeating what they have heard without checking it for themselves.
It’s far from guaranteed that SVB would have less exposed if the Fed had been paying more attention to it, but it’s possible.
The Fed’s report on SVB says that “The Board’s tailoring approach in response to the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) and a shift in the stance of supervisory policy impeded effective supervision by reducing standards, increasing complexity, and promoting a less assertive supervisory approach.”
The EGRRCPA being the 2018 Act, restricting Fed supervision, which Trump was so keen on.
So the Fed says that the problem was caused by the repeal of an act that allowed the Fed to interfere with banks’ lending criteria.
Say it ain’t so.
@ philip
Not quite: what the Fed says is that the Fed changed it policy; the change in the Fed’s policy reduced standards.
It does *not* say that the Act forced the change in policy – the reference to a shift in the stance is preceded by “and”. So a Biden-appointed Fed wants us to *think* that the Trump-era Act was responsible for the failure of SVB when it wasn’t.
After a few decades you’ll get used to trasnslating misleading but not *quite* lying press releases.