The crisis is only going to further concentrate the power of big banks in the United States, the opposite of what many believe is in the country’s best interest.
In the aftermath, the United States established new rules for designating the largest, most interconnected institutions as “systemically important,” meaning their sudden collapse could upend the entire financial system.
. The move was aimed at restoring investor confidence in the San Francisco-based bank, which serves a largely affluent clientele, following a 50 percent drop in its share price. “I’m scared to have all of our money in one account,” said Poppy Flowers’ Hardesty, who after leaving SVB opened three new accounts at JP Morgan, BofA and First Horizons, a regional lender.
In an interview, Gene Ludwig, former comptroller of the currency, said the administration needs to take steps to ensure a level playing field for banks of all sizes. While greater bank industry consolidation is likely, preserving regional and local institutions is important for small businesses, said Mary Ann Scully, co-founder of Howard Bank in Baltimore. Smaller banks can devote the personal attention to local businesses that a megabank never would, she said.
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