- Fed Vice Chair Michael Barr blamed bankers and Congress for Silicon Valley Bank's failure.
- Barr didn't mention the Fed's role in causing the bank blunders with its monetary policy.
- The Fed's prolonged quantitative easing and zero interest-rate policy created the incentives for the bank blunders.
- SVB had more deposits than it could safely lend, so it loaded up on long-dated Treasurys and Fannie Mae securities.
- Regulators failed to watch for banking mistakes and rising risks, despite the perverse incentives created by negative real interest rates for years.
The Fed Passes the Buck on Bank Failures
Michael Barr’s excuses for regulatory blunders are simply unbelievable.
The Editorial Board
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