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Supported SVB applicants ‘bear blame’

On Friday’s broadcast of CNN International’s “Quest Means Business,” Rep. Jim Himes (D-CT) said the Silicon Valley Bank depositors who were backed were to be blamed.

Himes said:[W]We have seen the irresponsibility of risk managers within the bank. I suspect we’re going to find… irresponsibility on the part of some bank supervisors. But let’s face it, those people who put $50 million in deposits in a bank, knowing full well, it’s on a sticker on the door of the bank, that this account is only insured at 250 [thousand]. They also bear some responsibility, and this is where moral hazard comes in. So we know two things: we can’t guarantee every last dollar in the banking system. It just creates huge moral hazard as to how the banks would then use those dollars. So I think inevitably we’re going to see treasurers, and we see treasurers, moving deposits to other places in the short term for their money. The problem with that, of course, is that it’s going to put enormous pressure on our small and medium-sized banks. And we’re going to have to tackle in the medium term what we need to do to make sure that we don’t become a country of a few mega banks.

Follow Ian Hanchett on Twitter @IanHanchett

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