From the Editorial Board: Democratic U.S. Sen. Elizabeth Warren thinks she knows who to blame for the collapse of Silicon Valley Bank and the financial fallout that followed. The bank’s chief executive officer? Its board of directors?
A pedestrian carries an umbrella while walking past a Silicon Valley Bank Private branch in San Francisco on March 14, 2023.
The blame ought to be placed where it belongs: The bank’s leaders blew it. This high-flying institution, which rode the wave of big-money tech startups, would still be around had it taken to heart the lessons that turned Chicago’s financial markets into world beaters, beginning in the 1980s.Our city’s exchanges pioneered the use of sophisticated financial products for managing interest-rate risk.
Speaking at the Futures Industry Association confab on Tuesday, Terry Duffy, chairman and CEO of Chicago’s CME Group, echoed a common sentiment among the participants: “Banks need to manage their risk just like farmers need to manage their crops,” he said. “We just did not see that.” One of the mistakes that Warren places at Powell’s feet is a 2018 banking deregulation bill that Trump signed into law. The legislation exempted the San Francisco institution and other mid-size and smaller banks from many of the rules adopted after the 2008 financial crash.
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