BANKING DRAMA: DÉJÀ VU ALL OVER AGAIN?

The collapse of Silicon Valley Bank was startlingly quick. On 3/9, less than 48 hours after its stock cratered, SVB was taken over by the FDIC. It’s the biggest stateside failure since 2008. It was all eerily reminiscent of the 2008 crash, as fears led to a classic run on the bank, which was forced to sell long-term securities at a big loss—thus exacerbating the problem and leaving billions in deposits stuck in the bank.

Two days later, New York-based Signature Bank was also taken over by regulators.

SVB and Signature represent, respectively, the second- and third-biggest banking collapses in U.S. history. (Washington Mutual is the all-time chart-topper thanks to its 2008 banger.) The Treasury Department and other regulators issued a statement assuring depositors at the two banks (and the sector at large) that “no losses will be borne by the taxpayer.”

Turmoil persisted in the banking sector on 3/13, especially among regional bank stocks, which were down as much as 12%. Trading was halted on several stocks multiple times. The government has taken a clear stance this time to protect depositors over shareholders and bondholders, at least for now. President Biden struck a reassuring tone in a speech to the nation, which may have helped put the brakes on the pummeling in the market.

A potential side effect of all this financial fuckery is that money could slowly be reallocated to the giant banks and away from smaller regional institutions. In case you were wondering how the behemoths would fare in all this. Turns out it's pretty sweet to be too big to fail.

Sen. Elizabeth Warren (D-Mass.) fired a shot across the bow in a 3/13 New York Times editorial, charging that the weakening of financial regulations was directly responsible for the debacle. "In the aftermath of the 2008 financial crisis, Congress passed the Dodd-Frank Act to protect consumers and ensure that big banks could never again take down the economy and destroy millions of lives," reads Warren's op-ed. "Wall Street chief executives and their armies of lawyers and lobbyists hated this law. They spent millions trying to defeat it, and, when they lost, spent millions more trying to weaken it."