JEFFREY CARTER: More On The Bailout: What If It Was The Right Move?

In principle, I am against bailing out banks. As I said in prior blogs, totally against it in 2008. In principle, I am against the bailout of Silicon Valley Bank, and Signature Bank or any bank. Bankruptcy courts exist, and they are a great disinfectant.

However, I also agree with economist Art Laffer of Laffer Curve fame that a customer who deposits money into a bank shouldn’t have to engage in a credit check on that bank and continue to do due diligence on its financial health while they have money deposited there.

It’s easy to make political points against the banks because of the things they donated to, what their websites looked like, and who was on their Boards of Directors. It’s also easy to demonize the bailouts as bailing out rich VCs. VCs most certainly were bailed out. . . .

It’s a big deal. It’s also a total abject failure of risk management at all regional banks and we ought to know why that is the case. Why are they using the Alfred E. Neumann School of Risk management to hedge their portfolios?

Because there are no consequences for doing so?