'The U.S. banking system is sound and resilient," Federal Reserve Board Chairman Jerome Powell said on Wednesday in an effort to calm depositors worried about more bank failures.
While another banking crisis might have been contained - a reassurance we take with a grain of salt - the Biden crisis will continue to metastasize as long as he and his administration are calling the shots.
One of the first things Biden did as president was to sign his "American Rescue Plan" into law - a $1.9 trillion spending splurge that he said was needed to "rescue" the economy.
What did Biden do? He bailed out SVB, and Treasury Secretary Janet Yellen this week promised that the federal government - that is, you and me - will cover all deposits at smaller banks, even though the FDIC insures deposits up to only $250,000.
As everyone should know by now, privatizing profits while socializing risks only encourages greater risk-taking and is a recipe for bigger disasters down the road. Just as problematic are calls to use the SVB debacle as an excuse to impose still stricter regulations on the banking industry, which will only stifle economic growth further.
If more regulation were the answer, there'd never be a bank failure anywhere, because the mountain of rules and mandates is already miles high.
Since 2000, the number of banks in the country has been cut roughly in half even as the size of the economy grew by 52%. No one can say how these interlinked crises will play out.
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