Partisan accusations over which US president is to blame for the demise of Silicon Valley Bank lack context, experts say
Those competing claims have to be measured against fundamental mistakes made by bank executives, experts told AFP.
"The rollback of the Dodd-Frank Act reduced the amount of regulatory oversight of banks such as SVB, but the main contributing factor for its failure was excessive risk-taking combined with weak internal asset-liability risk management," Williams said, noting that the California bank accepted $159 billion outside the FDIC insurance limit and failed to manage its asset exposure when interest rates were climbing.
"The size and speed of the SVB collapse, including concern over the transmission of systemic risk to the broader financial industry, has sparked a movement by the Biden administration to tighten regulation to reduce banks from engaging in excessively risky behavior," Williams said.assessing to what extent looser regulations contributed to SVB's collapse is a difficult task.
"It's hard to know whether that matters, but it does mean that the dialogue between the supervisors and risk managers was less intensive around planning for their own failure than it would have been if it was a bigger company," he said. And some experts told AFP it is inaccurate to assign responsibility for SVB’s downfall to Trump or Biden.an assistant professor in the Department of Accounting and Finance at San Jose State University, agreed."I'd blame SVB, as the operators of their bank, for their failure."
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