Dem Rep. Himes: Backstopped SVB Depositors ‘Bear Some Blame’

On a Friday broadcast of CNN International’s “Quest Means Business,” Rep. Jim Himes (D-CT) stated that Silicon Valley bank depositors who were subsidized were to blame.

Himes said,[W]e saw irresponsibility on the part of risk managers within the bank. I suspect we will find … irresponsibility on the part of some bank supervisors. But let’s face it, these guys put $50 million in deposits in one bank, and they know damn well, it’s on a sticker on the bank’s door, that this account is only insured for 250 [thousand]. They also take some of the blame, and that’s where the moral hazard comes into play. So, we know two things: We can’t guarantee every last dollar in the banking system. This just creates an enormous amount of moral hazard in terms of how banks use those dollars. So, I think, inevitably, we’ll see treasurers, we’ll see treasurers moving deposits to other short-term places to get their money. The problem with that, of course, is that it would put enormous pressure on our small and medium-sized banks. And we’ll need to struggle in the medium term with what we need to do to make sure we don’t become a country of two megabanks.”

He follows Ian Hanchett on Twitter @tweet

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