There are the largest Wall Street banks - JP Morgan Chase, Goldman Sachs, Citi, Morgan Stanley, Wells Fargo, etc. How do you view that difference?ĭK: It’s important for people to remember that there are really three broad categories of banks. LP: Wall Street and Main Street appear to be experiencing this crisis differently.
As soon as Silicon Valley Bank collapsed, a number of other, similar-sized banks came under deposit flight pressure and revealed some of the weaknesses and fragility that were going to have to be addressed at some point. Some were hoping that the relatively quiet period after Silicon Valley Bank and Signature Bank were rescued by the FDIC was going to mean that everything was great, but anybody who understands the economic, banking, and financial systems should know that when something happens in one part of the financial system, it almost inevitably reverberates in other parts. Lynn Parramore: Do you see the failure of First Republic and the ongoing concerns about several regional banks as signs that the crisis that started with Silicon Valley Bank back in March is more severe than many hoped?ĭennis Kelleher: The problems in the banking system that initially burst into public consciousness when Silicon Valley Bank collapsed really include a number of financial institutions, both on the bank and the non-bank side. A vocal crypto skeptic, Kelleher, whose organization was offered a million-dollar bribe by FTX to help it escape regulatory oversight, warns that the industry has “no legitimate or socially useful purpose” and that people who believe its cheerleaders are at great risk from a “fundamentally predatory business model.” In the following conversation with the Institute for New Economic Thinking, he explains why the reckless activities of under-regulated and under-supervised big banks unfairly harm the smaller banks Main Street depends on – leaving regular people to pay the price. Dennis Kelleher, who heads the financial watchdog group Better Markets, has long been pushing for tighter Wall Street regulation.
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