Coase-Sandor Working Paper Series in Law and Economics
Publication Date
2024
Abstract
The 2023 Silicon Valley Bank collapse was the third-largest bank failure in United States (US) history and one of the two largest since the 2008 financial crisis. This event served as the first major test for the post-crisis bank-failure regime in the US. This article evaluates how effectively that regime responded to the challenge. While some critics have questioned the effectiveness of both the regime and the US government's specific actions, others argue that the measures taken successfully mitigated systemic risk. Notably, the government felt compelled to provide discretionary depositor protection beyond what the legal framework required. This suggests that pre-established rules may be inadequate for managing bailouts and that a well-functioning bankrescue regime must account for the risk of abuse of discretion. The article concludes by exploring potential mechanisms to mitigate such abuse.
Number
1030
Recommended Citation
Casey, Anthony, "Silicon Valley Bank: A Case Study in Post-Crisis Bank Failures" (2024). Coase-Sandor Working Paper Series in Law and Economics. 1030.
https://chicagounbound.uchicago.edu/law_and_economics/1057
