The Silicon Valley Bank Aftermath
Total and absolute bank mismanagement and the lack of active oversight by The Federal Reserve Board of San Francisco is how I would describe the downfall of Silicon Valley Bank. Never would I have imagined a bank having 97 percent of its deposits uninsured nor over half of the deposits coming from one sector. And I do wonder if SVB constantly reminded depositors over $250k in deposits their money was not all insured...I know, wishful thinking.
Remember the old adage of never having all your eggs in one basket?
Now I certainly lost my share of sleep during the 2008 and COVID crises, but maybe only lost a few hours during this blip. The main concern this time was contagion due to the ability to move money over an iPhone and the impact of social media, especially by those who gained to benefit from a bank run. And certainly, there will be much debate as to whether the government should have bailed out depositors who held depoits in excess of $250,000. Remember, regulation is reactionary.
And for those now wishing for an increase in deposit insurance levels, be careful what you wish for as this would require Congress to enact legislation. Do you really believe some members of Congress wouldn't take this opportunity to attach language that could be very harmful to the banking industry such as clawbacks, compensation caps, and other mandates?
No doubt Fed Governor Michael Barr will enact enhanced stress tests for banks between $100 and $250 billion. Just a matter of time.
CBALIVE 2023
Attending this year's CBALIVE — the award-winning annual gathering of retail bankers hosted by the Consumer Bankers Association—was a different experience for me to say the least. After being intimately involved in the planning and execution (with tons of assistance) for 13 years, this year I was solely a participant getting a view from the "other side." I totally underestimated the amount of networking and comparing of notes and experiences that takes place outside the normal channels of general sessions and forums. The hallways and nooks and crannies are happening places! That being said, the forums I visited were pretty full across the board as attendees were anxious to hear the latest trends and analyses.
I also witnessed a ton of calmness among bankers regarding the SVB debacle. This was not at all a surprise as I have seen firsthand the commitment to consumers and regulators by CBA member banks. Most just thought SVB was an outlier. Sure hope they are correct!
Most people have no clue the number of hours and detail that goes into producing a conference of this magnitude. Previously, it took me a solid week to catch up on my sleep and come down from my adrenaline rush...and I felt just a little guilty this year feeling fully rested once returning 😀😀. Congrats to the entire CBA team and CBA President Lindsey Johnson for conducting another great event that is so vital to the industry.
Next!
One of my favorite times of the year...
First CBALIVE, then baseball's Opening Day, Masters, and Easter — that pretty well sums up how my March and early April happens each year. However, this year there was a twist with the LSU Women's Basketball team going on a remarkable run to win the NCAA championship under Coach @KimMulkey. I had no doubt she would reinvigorate the program but certainly did not expect a title in just her second year at the helm! Now if the Louisiana @RaginCajunsSB softball team can pull off a run of their own!
More on the interesting comments made by CFPB Director Chopra at CBALIVE coming next week.