Under the neoliberal economic model, which UK PM Margaret Thatcher and US President Ronald Reagan institutionalized in the 1980s, there have been perpetual bank crises, all of them owing to lack of rigorous banking regulation, as was the case under FDR during the Great Depression, which banks oppose. The S&L crisis of the late 1980s, lingering into the first half of the 1990s, followed by the banking-real estate crisis leading to the Great Recession of 2008 and the regional banking shock of 2023 was partly symptomatic of the economy’s financialization which allowed banks a great deal of flexibility to risk loans, including cryptocurrency and startups, for a high return – 10-28% rate.
Banking consolidation from the 1980s to the present has resulted in oligopoly of the sector which is itself extremely dangerous because the 'too big to fail' argument gives license to banks to behave recklessly in the market, knowing that the government will bail out millionaires and billionaires. Bank executives and board members are not held accountable or treated like white collar criminals for causing such massive disruption in the economy and society. A small-time thief stealing $100 dollars from a local mini-mart goes to prison for several years, while the government rewards banking speculators with taxpayer money after they have cause havoc in society. In fact, the former CEO of the bankrupt SVB was photographed in his luxury home in Hawaii on the same day that the government appointed a new CEO.
Meanwhile, the banking crisis disrupts the entire economy, from investors and depositors to workers whose firms must pay higher interest rates to secure credit. Oddly enough, the beneficiaries of banking crises include hedge funds making billions, Wall Street firms buying the bankrupt bank’s bonds at a huge discount, and politicians who have insider information and
lobby or vote on behalf of the bank bailout, as was the case with SVB and the governor of California. According to elected officials and mainstream media, the problem of the banking crises is limited to the few individuals directly involved, the "bad apples" theory. This is an old and rather superficial distraction from the systemic causes of a cyclical problem which produces the few bad apples. The corrupt individuals involved are symptomatic of the structural problem of neoliberalism which is corrosive for society. Isolating these individuals and vilifying them does not solve the problem for the public that has to pay the bills for the crimes of a systemwide financialization model that repeats itself every few years. Wait a few weeks, perhaps a few months, or years and more of these people will surface. In fact, there are others involved in schemes of lesser importance that have not come under the mainstream media's radar. Furthermore, the very famous stock analysts who were promoting the schemes of these people, the hedge funds profiting from the misery of bankruptcy, and the institutions backing the corrupt banks also have a role. The complex web of involvement is long and deep. Other than distraction intended to absolve the system, not much is gained by posting the faces of the isolated individuals on magazine covers and the web. The problem started with the neoliberal policies of the Thatcher-Reagan decade and it continues uninterrupted more than forty years later.
