Uninsured deposits should be subjected to tougher regulatory requirements to guard against the type of rapid runs that toppled three large regional banks last spring, suggests a paper to be discussed at the Brookings Papers on Economic Activity (BPEA) conference on March 29. In the wake of the failures of Silicon Valley Bank, Signature Bank, and First Republic Bank (three of the four largest bank failures in U.S. history), the authors look at two trends over the past quarter century--the substantial growth of uninsured deposits and the migration of business lending to non-banks. The trends challenged the failed banks and banks like them, and in some cases left them vulnerable to runs. And, using a simple model they constructed, the authors assess regulatory options for reducing the risk of destabilizing runs.
Authors
Jeremy C. Stein, Daniel K. Tarullo, Victoria Ivashina, Samuel G. Hanson, Laura Nicolae, Adi Sunderam
- Acknowledgements and disclosures
- David Skidmore authored the summary language for this paper. Chris Miller assisted with data visualization.Stein and Tarullo are former members of the Federal Reserve Board of Governors. Sunderam was a visiting scholar at the Federal Reserve Bank of Boston from January-June 2023, and Ivashina has been a visiting scholar there since 2015. The authors did not receive financial support from any firm or person for this article or, other than the aforementioned, from any firm or person with a financial or political interest in this article. The authors are not currently an officer, director, or board member of any organization with a financial or political interest in this article.
- Published in
- United States of America
