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Matthew Stoller explained the dangers of the decision to protect SVB depositors
Through UnHerd personnel
Reaction to the bailout of Silicon Valley Bank has been sharply divided, but not along political lines. On the one hand, there are democratic economic advisers, established Republicans and venture capitalist libertarians like David Sacks, who op behead this week to defend the decision. On the other side are populist politicians from the left and right, such as Senators Elizabeth Warren and JD Vance, who are calling for the banking industry’s loose regulatory framework to be addressed.
One figure who has offered his full support to the latter camp is economist Matthew Stoller. Stoller is research director of the American Economic Liberties Project and writes the Substack ‘BIG‘. He joined Freddie Sayers explain why he thinks the SVB bailout was so disastrous, arguing that it was completely unnecessary:
– Matthew Stoller
According to Stoller, the SVB crisis was a storm in a teacup, whipped up by administrators who did not want to deal with the inevitable consequences of their ‘poor risk management’.
– Matthew Stoller
Which begs the question: What would have happened if the Fed hadn’t acted? According to Stoller, SVB depositors would have been more or less okay over time if the crisis had followed a natural course:
– Matthew Stoller
Stoller believes the entire banking system needs an overhaul. First and foremost, the too big to fail banks must be dismantled and regulated “more aggressive”, with tThe result is “more banks, closer to communities, enabling risk management.” Another solution, which may be less palatable to many, is to allow everyone and anyone to bank directly with the Federal Reserve risk-free. Concerns about privacy and government control were dismissed. In any case, Stoller declares that it is a myth that the government is not already pulling the strings:
– Matthew Stoller
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