The explanation of systematic breakdowns in supervisory oversight over time must include the shift in Federal Reserve culture during and after the 1990s
The closing of Silicon Valley Bank (SVB) on March 17 began a series of extraordinary steps taken by key supervisors of the global financial system (United States, United Kingdom, and Switzerland), all of which tell us that we are not living in normal times. From the US Treasury’s approval of a “systemic risk exception” for SVB, thus allowing a blanket government guarantee of all its deposits, to the precedent-setting rescue of all deposits at Credit Suisse, ordinary understandings of the law were stretched to and probably beyond their limits.