On Friday’s broadcast of CNN Worldwide’s “Quest Means Business,” Rep. Jim Himes (D-CT) acknowledged that there’s blame to be laid on the depositors in Silicon Valley Financial institution who had been backstopped.
Himes mentioned, “[W]e saw irresponsibility on the part of the risk managers inside the bank. I suspect we’re going to find…irresponsibility on the part of some of the supervisors of the bank. But let’s face it, those people who put $50 million into deposits in one bank, knowing full well, it’s on a sticker on the door of the bank, that that account is only insured to 250 [thousand]. They also bear some blame, and this is where the moral hazard comes in. So, we know two things: We can’t guarantee every last dollar in the banking system. That just creates an immense amount of moral hazard with respect to how the banks would then use those dollars. So, I think, inevitably, we’re going to see treasurers, and we are seeing treasurers, move deposits into other short-term places for their cash. The problem with that, of course, is that that’s going to put tremendous pressure on our smaller and medium-sized banks. And we’re going to need to grapple in the medium-term with what we need to do to make sure that we don’t become a country of a couple of mega banks.”
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