Will Bank Failures Bring About Regulatory Dystopia?

With the sudden failure of Silicon Valley Bank and subsequent demise of Signature Bank, many wonder what regulatory corrections will materialize over the near and long term. The last financial crisis involving “systemically important” financial institution failures brought us the gift that keeps on giving in the form of the Dodd-Frank Act, as well as a relative shortage of seasoned financial institution professionals by virtue of early retirements, career changes, and increased M&A activity. Despite the Regulatory Relief Act of 2018, the effects of DFA continue to be broad and well documented.

So, what’s going to happen now? Nobody knows for sure at this point, and I’m certainly not a prognosticator of shifts in regulatory winds. However, it’s a pretty sure bet that we in the financial industry will see some new and changing regulations over the coming months. While the causes of the aforementioned banks’ failures were different than what precipitated the last crisis, the common denominator is risk. Hidden risk. Unseen risk. Unmitigated risk. 

Who is to blame? Well, that isn’t my place to say but I’m sure we’ll find out soon enough. However, experience tells me that regulators don’t like to miss things. And when they do, they tend to grab the steering wheel and yank it pretty hard the opposite direction. Case in point, like an armor-plated semi out of a Mad Max movie, Dodd-Frank plowed into myriad sources of risk, real and imagined, and tested the resolve of every community financial institution stakeholder, board member, executive, and employee in the country.

Whether the recent failures of Silicon Valley Bank and Signature Bank bring about a regulatory dystopia resembling that of Dodd-Frank remains to be seen. In any case, we all have access to some pretty important tools to keep our institutions running strong. One of the most effective of these tools is training. 

The Credit Union Webinar Network partners with 26 credit union leagues covering 44 states to provide relevant and timely credit union training webinars to tens of thousands of credit union professionals every year. And the money you spend with us not only buys you top-notch web-based training from the nation’s top subject matter experts, but a significant portion is paid directly to our partners to further their mission of supporting credit unions in your state.