… which is why Signature Bank was also placed in receivership this weekend. The contagion was spreading, if they did nothing there would be runs on a number of banks tomorrow. There still may be runs tomorrow.
Looking at other banks that maybe be in a similar position and taking prompt action is competence to be celebrated, I view it as more evidence that despite weaknesses in the regulatory framework they are not in a tough spot at all. They know they can act decisively without fear.
A tough spot would be an environment where they let the SVB situation drag out and didn't act on Signature until a run was in motion and had both to deal with at once.. then they would be fighting to restore confidence.
If you look at the numbers from 2007-08 and this stuff, plus the much tougher regulatory environment (despite SVB's ability to fall under a lot of thresholds) there just isn't the sort of systemic risk at play here that folks seem to be implying. Also this isn't a replay of the S&L Crisis of the 1980's because those lessons were actually learned but some institutions are still going to screw up because a rising interest rate environment is still challenging in the current regulatory regime.
