Silicon Valley Bank: Another Bailout — Can We Finally Stop Using the Term “Free Market?”
While we’re at it let’s eliminate: entitlements, handouts, democracy vs. authoritarian framing, and more
The Western financial system is once again on shaky footing as the US saw two large bank meltdowns — one the second-largest behind only Lehman Brothers — in incredibly short succession last week. The collapses of Silicon Valley Bank and Signature Bank have rightfully gotten a ton of attention. Because much of the chaos occurred on a Friday, markets closed, and nobody was sure how they would react once reopened the following Monday morning.
The panic and suspense went way beyond either bank’s depositors with many predicting a full-blown economic meltdown and lines of customers wanting to withdraw deposits from banks across the nation if the government didn’t get involved.
Two relatively large financial institutions tanking in a matter of days doesn’t exactly give confidence in a nation’s banking system.
It doesn’t exude economic stability either.
Details are still emerging and a lot is being written about exactly why Silicon Valley Bank went belly up with deregulation — a lot due to its own lobbying, a lack of oversight, higher interest rates from the Fed, losses on a huge number of bonds, and the evaporation of customer confidence all apparently playing a role.
Or, as many GOP members of Congress are claiming, it was “wokeness” — I can’t wait for the freaking Jordan Peterson tweet.
Whatever the root causes, the trusted US government stepped up to the plate in a matter of hours to guarantee all depositors would be made whole. Importantly, even those above the $250,000 FDIC threshold would be protected, which was apparently around 90% of the SVB depositors.
The Federal Reserve, Treasury Secretary Janet Yellen, and the White House were all quick to reassure the globe that Uncle Sam was taking care of it, and there’s no shaky-ass financialized neoliberal house of cards economy to look at here.
Of course, in one sense, the bank’s customers didn’t necessarily create the problem. They opened accounts and didn’t…