Editorial Board
The Fed Has the Tools to Stop Bank Runs
Lenders with a lot of uninsured deposits should be required to have high-quality assets ready at the Fed’s emergency lending facility.
They’ve got the money.
Photographer: Joshua Roberts/Bloomberg
As New York Community Bancorp Inc. scrambles to shore up its capital to deal with potential loan losses, analysts are watching to see if depositors pull their money. It’s been almost a year since more than $40 billion was withdrawn from Silicon Valley Bank in a single day, with little consensus on a long-term solution for lenders faced with such a speedy digital bank run.
The good news is that regulators have recently hit on a viable strategy to address this risk. The bad news is that they might not take it far enough.