By quickly ring-fencing SVB and saving depositors, the Fed showed it is becoming more of a learning organization. Combined with its excellent performance managing the worst inflation spike in 40 years, instigated by the worst pandemic in 100 years, the Fed demonstrated an ability to quickly adjust when circumstances demand flexibility. This is new behavior. To build on this and to show that it has truly committed to new behavior, the Fed will have to accomplish a few more tasks. Given the behavior of SVB management in the period leading up to the crisis, with the CEO selling $4 million in stock on or around February 28 th just weeks before his bank collapsed, an effort to claw back the proceeds of any stock sale taking place less than 60 days before the collapse should be initiated. News reports also indicate that management received bonuses in the days leading up to the collapse. These should be clawed back, too. Further, one key to the collapse was a run on the bank accelerate...
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