The Rise and Fall of Silicon Valley Bank: Lessons in Regulation and Risk.

The recent collapses of Silicon Valley Bank and Signature Bank have highlighted the failure of banking regulators to detect obvious red flags and prevent reckless banking practices. Silicon Valley Bank's rapid growth in borrowing from the Federal Home Loan Banks system, its overconcentration in one sector of the economy, and its use of uninsured deposits to buy too many long-term bonds were all clear warning signs that regulators failed to act on. The culture of regulators is just as important as any rules or laws, and the legacy of the Trump administration's opposition to regulation has only exacerbated the problem. The Federal Reserve's failure to internalize the fragility of the financial system and act accordingly has further eroded confidence in the American banking system.