The largest financial institutions deemed systemically important are expanding even more during the 2023 banking crisis, leading to greater systemic risks, according to economists who spoke to the Daily Caller News Foundation.
When the FDIC bailed out Silicon Valley Bank (SVB) and Signature Bank in March due to a systemic risk exception, depositors moved their money to the biggest banks in the country. “Larger banks mean larger bailouts,” Dr. Thomas Hogan, senior research faculty at the American Institute for Economic Research and former chief economist for the Senate Committee on Banking, Housing, and Urban Affairs, told the DCNF.
“For example, JPMorgan Chase, the nation’s largest bank, just got a sweetheart deal from the FDIC to acquire failing First Republic Bank,” he said.These developments and future ones will cause more consolidation in the sector. “Increasing the concentration in the banking industry simply increases the systemic risk,” E.J. Antoni, a research fellow for Regional Economics at the Heritage Foundation’s Center for Data Analysis, told the DCNF.
