Recent bank failures, including those of Silicon Valley Bank (SVB), Signature Bank, and Silvergate Bank, have high-profile government figures trying to find culprits. U.S. President Joe Biden and former President Donald Trump have publicly blamed each other for their policies, but according to some analysts, the problem may be ignorance in the banking system.
Biden and Trump tussle over the causes of the banking collapse
The banking crisis currently facing the United States with the collapse of three mid-sized banks (Silicon Valley Bank, Signature Bank, and Silvergate Bank) has prompted U.S. President Joe Biden and former President Donald Trump to explore the causes of the largest bank failure since the 2008 subprime mortgage crisis. sparked a political controversy.
Biden and Trump have been vocal about blaming each other’s policies; on March 13, in the wake of the Silicon Valley Bank collapse, Biden reassured people about the isolated nature of the incident and called on Americans to trust the banking system, saying it is safe .
At the same time, President Biden shifted the blame for the bank’s failure to the deregulatory developments that occurred under the Trump administration, which canceled the more stringent banking regulations enacted by the Dodd-Frank Act under former President Obama’s mandate. Bidensaid:
Unfortunately, the previous administration rolled back regulations.
Trump refuted these allegations and made it clear that he believes the current administration is responsible for the current shakeup in the banking system.As part of a speech on March 28, Trumpsaid:
We are witnessing a banking collapse. Biden, his enablers, and Congress are directly responsible for this economic catastrophe. And it will only get worse with Joe Biden at the wheel. It is happening in almost every sector.
But for some analysts, for example, it is responsible for problems that could easily have been addressed by assessing the risk of Silicon Valley Bank. This is the opinion of Andre Esteves, millionaire CEO and founder of BTG Pactual, one of LATAM’s largest investment banks, which manages more than $70 billion in assets.
Esteves points out that it was the lack of expertise of bank managers brought on by years of low interest rates that led to the collapse of Silicon Valley Bank. Estevez explained that the current generation of operators only knows inflation and hawkish policies by the book, i.e., in theory, and do not know how to deal with them in practice.
very basic asset-liability management, which every junior analyst working in a van knows.