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It’s the Banking Regulations, Stupid

Rather than developing a robust understanding of the errors that led to the 2008 global financial crisis, politicians and the public demanded that supervisory authorities simply double down on regulation. So, that is what they did, and we are now seeing the results with the sudden collapse of Silicon Valley Bank.

LONDON – Do more bank “bailouts” amount to more proof that capitalism doesn’t work? Some commentators seem to think so. But what capitalism are they talking about? It has been a long time since there was any trace of market discipline or capitalism in banking, one of the most heavily regulated industries of all. Coming on the heels of the travails of Banco Popular and other banks, the failure of Silicon Valley Bank is another case of an institution collapsing overnight without breaching any of the many prudential regulations by which it was governed.