The Danger Beneath the Surface: How Bad Policy Led to Bank Failures

It’s been said that the road to Hell is paved with good intentions. The difficult situation that many mid-size, regional banks currently find themselves in is a direct consequence of policy decisions made over the last 15 years. While the intentions behind these policies were well-meaning, the consequences of these decisions have been dire.

2023 has seen the biggest bank failures since the Global Financial Crisis of 2007-09. The current banking emergency has claimed Silicon Valley Bank, Signature Bank, and now First Republic Bank. Market watchers are wondering if there are more dominoes set to fall. The tragedy of the situation is that these consequences were entirely foreseeable if one simply maintained a skeptic outlook and asked the right questions.

Hoping to prevent further calamities, different policy solutions are being proposed to limit the risk of further bank failures. While well-meaning, these “solutions” will have consequences of their own. Swan only asks that readers consider the consequences.

What will be covered?

  • What were the causes of the 2023 bank failures?
  • Policy Remedies for bank failures and possible consequences
  • What can we learn from the history of U.S. bank failures?
  • How can investors insulate themselves from bank failures?