In a Tweet thread on March 16, Wood criticized the Federal Reserve’s inability to avert bank runs despite all the signs being there. She said she was “baffled that banks and regulators could not convince the Fed that disaster loomed.” She argued that the Fed policy was the primary culprit for the ongoing banking crisis since there was a venture capital funding drought.
Crypto did not force SVB and Signature into bankruptcy. In my view, Fed policy was the primary culprit. Because of a VC funding drought and higher yields on money market funds, deposits left the US banking system.Pointing towards the asset/liability mismatch, which, even normal in most circumstances for banks, was untenable in the current scenario as deposits left the banking system for the first time since the 1930s.
She also reminded everyone that the ongoing crisis wasn’t forced by the cryptocurrency as the ecosystem has been under heavy scrutiny since FTX's downfall leading to a severe regulatory crackdown. Wood said that regulators are using crypto as a scapegoat for their own lapses in oversight of traditional banking.
If you are correct, Congressman, then the FDIC and others will prevent the US from participating in the most important phase of the internet revolution. Like you, I believe regulators are using crypto as a scapegoat for their own lapses in oversight of traditional banking.
What's your safety net for a banking situation?
'Maybe regulators should take a closer look at their own practices instead of pointing fingers at crypto.'
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