On Wednesday’s broadcast of “PBS NewsHour,” Harvard University Economics Professor and former Chief Economist at the International Monetary Fund Ken Rogoff said that the Federal Reserve and Treasury Department have signaled that they’ll “protect depositors, even ones with billions of dollars they’ve bailed out with Silicon Valley Bank” and this will lead to bankers engaging in more risky behavior and “bigger problems in the future.”
Rogoff stated, “I feel like the Federal Reserve and the Treasury have kind of broadcast that they’re going to protect depositors, even ones with billions of dollars they’ve bailed out with Silicon Valley Bank. I think they’re going to continue that. That has a lot of problems, because bankers will do more risky things. It’s going to lead to bigger problems in the future. But they’ve really telegraphed that. The problem is, the other side of the coin is that everyone’s worried the banks will not be able to lend as much. The regulators are going to be looking harder. They’re going to have to raise deposit rates, and they’ll have [fewer] profits to lend out. So, for the moment, it looks like they’ve contained the panic. But, longer term, bankers do risky stuff, and they certainly aren’t reining that in. And the more they regulate it, the harder it’s going to be to get loans. So, there are certainly problems ahead.”
Follow Ian Hanchett on Twitter @IanHanchett
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