The saying that "everything Trump touches dies (ETTD)" applies to banks too, apparently. Politico has a story on how directives by a Trump-appointed Federal Reserve official exacerbated problems:
"Federal Reserve regulatory chief Michael Barr on Friday acknowledged that the central bank failed to properly oversee Silicon Valley Bank before its spectacular collapse — but placed some of the blame on his Trump-appointed predecessor.
In an extraordinary and widely anticipated report led by Barr, the Fed also faulted SVB’s leadership for allowing glaring problems to build up before the run on deposits last month that left the once-high-flying bank insolvent and shook the global financial system.
But the 100-page document criticizes an overly cautious approach by examiners at the central bank, a problem that it says was worsened by directives from Randal Quarles, the Trump-appointed official who served as vice chair for supervision until late 2021.
Those directives, combined with the Fed’s implementation of a bipartisan bank deregulation law passed by Congress in 2018, 'impeded effective supervision by reducing standards, increasing complexity, and promoting a less assertive supervisory approach,' according to the report." (our emphasis)
With news that the First Republic Bank lost $102 billion in customer deposits, and with its stock plummeting 75% this week, the financial damage from those directives has yet to be fully tallied, but it will be enormous. The Republican mantra has always been to cut regulations, oversight and red tape, and in the case of this fiasco, they're reaping the whirlwind.
(photo: Randal Quarles. A. Harrer / Bloomberg News)
