“POWELL’S LEGACY RISKS BEING TARNISHED MORE BY SVB COLLAPSE
“The collapse of Silicon Valley Bank threatens to further besmirch the reputation of Federal Reserve Chair Jerome Powell, on top of the blemish he’s suffered for being slow to recognize the risk of rampant inflation.
“Friends and foes of the Fed alike have faulted the central bank for not heading off the troubles at the nation’s 16th-largest lender before they blew up into a crisis that shook the financial system and prompted extraordinary steps by policymakers over the weekend to contain it.
“’There was asupervisory failure,’ said former Fed Governor Daniel Tarullo, who oversaw the central bank’s regulatory portfolio in the wake of the 2007-09 financial crisis and is now a Harvard Law School professor.” [Emphasis added.]
Hard to argue with, no? First, Powell overdid QE by driving rates into the floor, and then, when he finally saw that the resulting high inflation actually was a problem to be dealt with, he proceeded to overdo QT—which is a key reason why SVB ended up with the bank-busting asset-lability mismatch it did. The next thing you know, voilà!, a banking crisis is at hand. Impressive! I mean, even Arthur Burns couldn’t manage that.
More missteps by Jerome Powell
By Thomas K. Brown,
ALL THE WRONG MOVES: Ya think?
“POWELL’S LEGACY RISKS BEING
TARNISHED MORE BY SVB COLLAPSE
“The collapse of Silicon Valley Bank threatens to further besmirch the reputation of Federal Reserve Chair Jerome Powell, on top of the blemish he’s suffered for being slow to recognize the risk of rampant inflation.
“Friends and foes of the Fed alike have faulted the central bank for not heading off the troubles at the nation’s 16th-largest lender before they blew up into a crisis that shook the financial system and prompted extraordinary steps by policymakers over the weekend to contain it.
“’There was a supervisory failure,’ said former Fed Governor Daniel Tarullo, who oversaw the central bank’s regulatory portfolio in the wake of the 2007-09 financial crisis and is now a Harvard Law School professor.” [Emphasis added.]
Hard to argue with, no? First, Powell overdid QE by driving rates into the floor, and then, when he finally saw that the resulting high inflation actually was a problem to be dealt with, he proceeded to overdo QT—which is a key reason why SVB ended up with the bank-busting asset-lability mismatch it did. The next thing you know, voilà!, a banking crisis is at hand. Impressive! I mean, even Arthur Burns couldn’t manage that.