The failure of three banks in the last two weeks, including Silicon Valley Bank and Signature Bank just this weekend, is a saga of utter government incompetence.
Call these bank collapses Biden’s Banking Busts. The administration has been obsessing on woke causes while banks teeter toward insolvency.
Three days before Silicon Valley Bank’s Friday failure, Treasury Secretary Janet Yellen cautioned that climate change puts the banking industry at risk.
Yellen was in la-la-land, speculating that future storms and tornadoes could diminish the value of banks’ assets.
Weather is a risk, but she was oblivious to the much more immediate problem facing banks — the plummeting value of the bonds they own.
She was heedless to the impending downfall of SVB and possibly several other small banks that had purchased long-term bonds when interest rates were near zero.
After doing nothing to tame inflation the previous year, the Federal Reserve hiked rates repeatedly in 2022 to make up for its inaction.
Those rapid rate hikes, the most drastic in decades, made the banks’ bonds lose value.
A week before Yellen’s climate-change harangue, Moody’s Investors Service already had delivered SVB the bad news that it was about to be downgraded several notches because its bond inventory was not worth enough to repay depositors.
The day before Yellen’s loony speech, Federal Deposit Insurance Corp. Chairman Martin Gruenberg also warned that the diminishing value of banks’ bond holdings meant a $620 billion problem ahead.
The Office of the Comptroller of the Currency, part of Yellen’s Treasury, is responsible for examining the financial condition of banks. It failed to avert the SVB collapse.
Yellen has been an outspoken activist for climate change, women’s rights and diversity, including appointing Treasury’s first-ever racial-equity counselor.
Apparently the hordes of bureaucrats working under her are also too busy with diversity, equity and inclusion seminars to prevent banks from failing.
R&I – TxPAT
