Dodd-Frank

The Dodd–Frank Wall Street Reform and Consumer Protection Act (Pub.L. 111–203, H.R. 4173; commonly referred to as Dodd–Frank) was signed into federal law by President Barack Obama on July 21, 2010. Passed as a response to the Great Recession, it brought the most significant changes to financial regulation in the United States since the regulatory reform that followed the Great Depression. It made changes in the American financial regulatory environment that affect all federal financial regulatory agencies and almost every part of the nation's financial services industry. As with other major financial reforms, a variety of critics have attacked the law, with some arguing it was insufficient to prevent another financial crisis (or more bailouts) and others contending it went too far and unduly restricted financial institutions. President-Elect Donald Trump's transition team has vowed to dismantle the Dodd–Frank act.

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Biden spending continues to destroy our economy

3/14/23

from The Gray Area:

3/13/23; updated 3/14/23:

The Biden Administration's addiction to spending, as was predicted, has been an economical disaster. The SVB collapse is another casualty of government politics over economic prosperity.

First, Biden Administration spending took workers off the street and incented them to stay home. After COVID demand naturally increased. Supply chain disruptions limited supply. Increased money supply in the economy with lower supply increased inflation dramatically. Supply chain issues and inflation increased cost of goods across the board putting pressure on all companies and workers. The Federal Reserve then took the necessary action to cool demand & inflation by consistently raising interest rates. This reduced capital in the economy and turned low interest investments into big losers. This process helped generate (along with risky decisions by bank leadership, they must have taken Obama's advice that interest rates on debt are so low they don't matter) the SVB collapse last week and the fear of more to come. Pressure on financial markets is significant and growing. Maudlin Economics said that "the weekend drama over the failed Silicon Valley Bank is reminiscent of 2008 with different players and details."

Authorities reached the best possible solution in this crisis, but another test looms with First Republic Bank. The Wall Street Journal explains: Shares of First Republic Bank FRC -61.83% decrease; and major U.S. regional bank stocks suffered their largest decline in three years, despite efforts by regulators to calm investors following a pair of bank failures. First Republic shares closed down nearly 62% after earlier falling as much as 75%, its largest decrease on record. The bank said Sunday that it had shored up its finances with additional funding from the Federal Reserve and JPMorgan Chase.
Depositors have been guaranteed all their money back, even though FDIC rules says only $250k per account. Breaking these rules sends shockwaves around the country, what would this mean to future defaults? $250k reimbursement per rules or unlimited reimbursement depending on which company fails (California bank- which gave $73M to BLM & related causes)? Who the depositors are (Silicon Valley Dems)? And, who the administration is (Biden)? Will Biden react the same if a Texas Bank fails?

Mark Cuban has a good point on this topic regarding laws,not discretionary political decisions:

A couple SVB thoughts. 1. 250k is too low. It's insane that a small company with say 2.5m in payables and payroll at the end of the month should be "prudent" and split their cash across 10 banks in case of a run. The fees and admin would be crazy. But great for banks
— Mark Cuban (@mcuban) March 11, 2023

These events highlight the lagged effects of monetary policy and could trigger the bear market’s next leg down.
The Fed may pause interest rate hikes but that’s a far cry from reversing them.

A New York Times headline read: Elizabeth Warren: Silicon Valley Bank Is Gone. We Know Who Is Responsible. Sen. Elizabeth Warren, Sen. Bernie Sanders & Rep. Alexandria Ocasio-Cortez, of course, immediately stepped in to blame Donald Trump and the easing of government regulations in Dodd-Frank. A Washington Examiner headline read: SVB collapse: Progressives blame 2018 rollback of Dodd-Frank for bank failures. Pressed about bailing out SVB on Sunday, Treasury Secretary Janet Yellen said federal regulators were focused on making customers whole. "Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out, and we’re certainly not looking. And the reforms that have been put in place means that we’re not going to do that again," Yellen said. According to another Washington Examiner story, Woke ESG standards didn’t help SVB, FTX, or Norfolk Southern. A company such as SVB, which was all in on ESG, should have done a better job of stress testing its models to minimize the risk of a bank run. But it instead hired a woke executive to oversee its financial modeling. Jay Ersapah, the company’s United Kingdom head of risk management, boasted on her profile that she was a “queer person of color” and “first generation immigrant.” Ersapah said she was “privileged” to lead an LGBT task force to “help spread awareness of lived queer experiences.” Home Depot co-founder Bernie Marcus, a clearly accomplished business leader, said , “These banks are badly run because everybody is focused on diversity and all of the woke issues and not concentrating on the one thing they should, which is, shareholder returns.” The Wall Street Journal says "SVB Doesn’t Deserve a Taxpayer Bailout." Ignore Silicon Valley fear-mongering about bank runs. This is a simple case of bad risk management. SVB intentionally decided not to hedge its interest-rate risk. This is shocking given that its $120 billion securities portfolio had a duration of 5.6 years, meaning a 200-basis-point increase in the five-year rate would equate to a $14 billion loss, roughly equal to SVB’s entire capital base. Either SVB was incompetent or this is a case of moral hazard, taking excessive risk and expecting political favors and bailouts. It turns ot SVB’s real “hedge” was to curry favor with the Biden administration. Biden actions during & after COVID, and before, during and after SVB/Republic events, guarantee more financial and moral issues facing America. And, now, censorship?!