We are going to give Dodd-Frank a serious hair cut" - President Trump 2018
In the most recent "Big Bank Bailout" scandal, back in 2008 during the housing collapse that led to stricter regulations, known as Dodd-Frank ACT, put in place by the Obama administration in 2010, preventing banks like Silicone Valley Bank from being able to failing due to preventative measures ensuring they are not over-extended, enabling customers to withdraw money by having enough on hand to do so, and disallowing bank run mentality to set in.
A bank run is the sudden withdrawal of deposits of just one bank. A banking panic or bank panic is a financial crisis that occurs when many banks suffer runs at the same time, as a cascading failure." -wiki
Each depositor is backed and guaranteed by the government as the FDIC's standard insurance covers up to $250,000 per depositor, per bank. What's known is that all of the depositors of SVB are cleared of any losses and may withdraw any amount as of today, investors will be the only ones who lost as well as those who were running the banks will lose their jobs, at the time of the collapse.
Many of these safety regulations are in fact due to many of the regulations put into the Dodd-Frank Act and, amidst the reason why this was not caught earlier due to the Trump administration stripping out many of the Dodd-Frank Act. SVB CEO Gregg Becker lobbied in 2015 to strip the bill, which in 2018 The Trump Administration complied.
Two weeks ago the same CEO sold 3.6 million dollars of assets before the collapse of Silicon Valley Bank. The above graph shows SVB doubling employees yearly as others do the opposite during the pandemic. In 2022 when they lost close to fifty percent of their growth rate, yet continued to hire as if they had doubled their growth. As the coming weeks get more into the details of why these banks failed, there is one thing to count on, Dodd-Frank Act will be scheduled for a root job.
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