Why Are Banks Collapsing? A New Federal Reserve Report Holds a Clue

Federal regulators seized the struggling First Republic Bank on Monday, which they promptly sold to JPMorgan Chase. Reports show First Republic had some $230 billion in financial assets, which quickly evaporated, making it the second largest bank collapse in U.S. history, exceeding the recent bankruptcies of Silicon Valley Bank and Signature Bank .

You read that correctly: Three of the four largest bank collapses in U.S. history have occurred in the last 60 days. The events naturally have raised questions about the strength and durability of the U.S. banking system. As of Tuesday, confidence appeared weak. The KBW Regional Banking Index saw shares hit an annual low as investors fled from regional bank stocks.

That something is wrong in the U.S. financial sector is apparent, but few agree on the source of the affliction. Some blame banks for going “woke,” while others point to Federal Reserve policies. Others call out the failure of regulators and bank auditors .

One possible cause for the financial reckoning has gone largely unnoticed, though it was buried in a Fed report published last week.

While the conventional wisdom is that banks simply need to be regulated harder, a report from the Fed’s Board of Governors suggests banks are already struggling to navigate a labyrinth of federal rules and regulations. This was particularly true of SVB, which had experienced rapid growth in recent years, causing it to “move across categories of the Federal Reserve’s regulatory framework.”

That framework, the Fed dryly notes, “is quite complicated” ( indeed ) …

Read the rest of this article at the Washington Examiner. But first watch me discuss banks with Austin Peterson on his show (27:00 mark). (And please subscribe to his YouTube channel, where I’m a guest on Monday mornings.)