Steve Hanke and Caleb Hofmann: Banks Have Now Become Gov't-Backed Businesses -- Just Look at Silicon Valley Bank
Author: Steve H. Hanke and Caleb Hofmann
Outlet: Daily Caller
Date: March 13, 2023
Writing days after Silicon Valley Bank's collapse, Hanke and Hofmann argue that the federal response — backstopping all of the bank's deposits, insured and uninsured alike — has effectively converted American banks into government-backed businesses. SVB had made a bad bet on long-duration U.S. Treasuries and mortgage-backed securities that the Fed's rate hikes turned into large losses, and the authors warn that shielding depositors and creditors from the consequences entrenches moral hazard while leaving the underlying cause — the Fed's monetary mismanagement — unaddressed.
Full Citation:
"Steve Hanke and Caleb Hofmann: Banks Have Now Become Gov't-Backed Businesses -- Just Look at Silicon Valley Bank," Daily Caller, March 2023 (with Caleb Hofmann).
Co-authors: Caleb Hofmann