Why Is the US Regulating JPMorgan But Not SVB?
Washington has created a blind spot in an otherwise sound financial system. It should look to China if it wants to reform.
The laissez-faire approach towards small banks is wrong.
Photographer: David Paul Morris/BloombergSmall banks seem to be in trouble. SVB Financial Group’s hasty fundraising sent US bank stocks into a nosedive. Prominent venture capitalists advised their tech startups to withdraw money from Silicon Valley Bank, while mega institutions such as JP Morgan Chase & Co sought to convince some SVB customers to move their funds Thursday by touting the safety of their assets. Traders are now speculating which lender will be the next victim.
Since the global financial crisis, US regulators such as the Federal Reserve have taken a conflicting approach on banks. On the one hand, they talked openly about spending less time policing the balance sheets of small institutions, thereby giving them room to innovate and dabble in fintech. On the other, they have tightened the noose on what they deemed as “systemically important” mega banks. JPMorgan and Bank of America Corp. are two examples.