OPINION: 'We cannot continue to privatize bank profits while shifting their losses to taxpayers through government bailouts to save us from economic collapse,' writes Marana resident Dee Maitland.
I spent 25 years working as a bank officer for a number of banks and then for the Federal Deposit Insurance Corporation . I want you to understand that banks are different from other companies.
The failure of Silicon Valley tech firms during the 1990 dot-com bubble did not cause a national economic collapse, while a massive pullout of deposits from Silicon Valley Bank could. Because banks are different. They are chartered by the government to distribute and manage the national money supply. Cash in banks in the form of dollar deposits has a circulation value two or more times greater than the face value of the dollar deposited.
A hot stock market caused deposit banks to complain they were being regulated out of the financial rewards of a capitalistic economy and they lobbied for elimination of the restrictions. Their efforts resulted in passage of the Gramm-Leach-Bliley Act of 1999 that removed the barrier between deposit banks and investment banks.
In response, the Dodd-Frank Wall Street and Consumer Protection Act of 2010 restored some regulations. Just eight years later, capitalists again prevailed with the 2018 Economic Growth, Regulatory Relief and Consumer Protection Act, once again removing those regulations and history was destined to repeat itself beginning with SVB.
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