US regulators are setting a dangerous precedent on Silicon Valley Bank

US regulators' decision to bail out two midsized banks poses a dangerous precedent for future bailouts, despite the banks representing a minuscule part of the US banking system. The decision could set dangerous expectations for future bailouts and uninsured depositors include leading venture capital

March 15, 2023 . 3:07 PM

1 min read

Regulators' decision to bail out two midsized banks, Silicon Valley Bank and Signature, sets dangerous expectations for future bailouts.
The failure of these two banks, with combined assets of $300bn, poses minuscule risk to the US's $23tn banking system.
Uninsured depositors of SVB include leading venture capitalists and their portfolio companies who are financially sophisticated.
Regulators need to review all banks' capital capacity to withstand market losses on their securities portfolios.
The government needs to be careful in its communication to avoid causing deposit runs.