Will Bank Failures Bring About Regulatory Dystopia?
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.
Larry Williams is President and CEO of the Credit Union Webinar Network and has over 20 years in banking, specializing in lending, credit risk management, and executive leadership.
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