Banking problems stem from excessive government tinkering

One local banker sees the rapidly spreading bank failures primarily as the result of misguided activity by the federal government.

Bennett Brown said there may have been bank mismanagement, but the government-driven inflation is the root cause.


“Three years of interest rates kept artificially low and printing money generates inflation and even banks that are well run can have problems,” Brown said.

Brown has been in banking for many years, several in community banks, and currently is part of a group that is hoping to turn a small-town Oklahoma bank into a national digital bank. It is called Old Glory Bank.

Brown was a bank examiner for seven years, so he fully understands how banks can fail. It often has a lot to do with liquidity and asset liability management.

In the past few days, regulators have shut down Signature Bank in New York and Silicon Valley Bank in California, which was used extensively by high-powered tech companies.

Federal government politicians are rushing to blame everyone but the government and some, like Sen. Elizabeth Warren, want to blame the Great Scapegoat, Donald Trump.

Brown said Janet Yellen’s claim that there won’t be a cost to taxpayers is dubious. The costs of government failures always trickle down to consumers and taxpayers. Money from the Federal Deposit Insurance Corp. will pay the failed bank’s customers. The deposits in the two banks total more than three times the current balance of funds at the Fed.

“Taxpayers will pay for those bailouts directly and indirectly. Just watch how it is explained over the next 30 days,” Brown said.

Another problem for the failures may be that the banks were more concerned about “woke” policies than their balance sheets and were doing things not prudent from a banking standpoint.

Bipartisan deregulation during the Trump administration had little to do with the problem, contrary to Warren’s claims, Brown said.

Brown said federal monetary and fiscal policies are behind the current stress on banking institutions. And while the big banks may get a bailout, because they are deemed “too big to fail,” many community banks will struggle without government help.

This is what happened to many smaller community banks because of the Troubled Assets Relief Program, he said. The money only went to banks with more than $1 billion in assets. Jacksonville had 17 community banks in 2005 and now has only one, he said.

Brown said he believes smaller community banks generally are better managed and overall safer than many of the larger regionals and money center banks.

With an astronomical budget proposed and trillions in tax increases, the out-of-control federal government shows no signs of moderating its harmful influence on the economy and its obsession with woke policies is dividing Americans. There is little question that is exactly what it is intended to do.

Inflation always is the result of government policy. It is a tax that obfuscates the government’s mismanagement. Other nations from Venezuela to Greece have tried to spend their way out of the problems they created, and they never succeed.


Lloyd Brown

Lloyd was born in Jacksonville. Graduated from the University of North Florida. He spent nearly 50 years of his life in the newspaper business …beginning as a copy boy and retiring as editorial page editor for Florida Times Union. He has also been published in a number of national newspapers and magazines, as well as Internet sites. Married with children. Military Vet. Retired. Man of few words but the words are researched well, deeply considered and thoughtfully written.

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