2024 drives US political response to SVB collapse

Significance

Meanwhile, the blame game for the quick-fire failures of SVB and Signature Bank has started with calls from the left for reversing bank deregulation and criticism from the right of the Biden administration for being more concerned with banks promoting its social justice agenda than being capable bankers.

Impacts

• Contagion risk remains, but the speed at which regulators stepped in reflects lessons learned from the 2008 global financial crisis.
• SVB's failure points to the difficulty of regulating for future unintended consequences, in this case, of the Fed’s rate hikes.
• Making all depositors whole will provide a bulwark against crypto failures linked to stable coins tethered to dollars held at SVB.