Summary

Ten days after the collapse of Silicon Valley Bank and emergency measures to stabilize the system, key parts of the banking industry are still reeling and anxious. UBS agreed to buy out its rival Credit Suisse for a fraction of its market value, and there were new efforts Monday to help stabilize First Republic Bank. In prepared remarks on Tuesday, Treasury Secretary Janet Yellen said , "The situation is stabilizing," but also pledged that the Biden administration would take steps to protect the banking system. The Silicon Valley bank collapse on March 10, 2023, was the largest bank collapse since Washington Mutual went belly up during the financial crisis of 2008. For a transcript of this story, click here . News wrap alternative : Check out recent segments from the NewsHour, and choose the story you’re most interested in watching! You can make a Google doc copy of discussion questions that work for any of the stories here.

Five Facts

• Who is responsible for the current banking collapse (a.k.a. bank crisis of 2023)?


• What are a few of the key events that took place since earlier this month surrounding the bank collapse?


• Where were/are the banks discussed in this story headquartered?


• When were the Dodd-Frank banking regulations rolled back? (every Republican and several Democrats voted for deregulation in 2017 with Donald Trump signing this executive order)


• Why does the U.S. not have more laws in place regulating the banks in order to avert a banking crisis?


• How does the amount of money that the Fed insures (up to $250,000) prevent a "run on the banks"? ( = the quick move by people who have money in a bank to take it all out at once fearing the bank will close/fail when such a move likely guarantees that that will be the result)

Focus Questions

Banking regulations were put in place by the U.S. government (Dodd-Frank) after the 2008 banking crisis; however, due to various factors including pressure by powerful banks in the form of political donations to lawmakers and lobbyists as well as lawmakers own personal connections to the banking system, these regulations were removed in 2017-2018 under a Republican-controlled Congress. Several Democrats including one of the authors of the law, former Rep. Barney Frank (no longer in office at the time), supported the banking deregulations. Read NPR's Roben Farzad's remarks again, and discuss, should the banks have been deregulated just 10 years after the 2008 financial crisis? Why do you think that happened?

And it was something that it's amazing to people that a bank that was so big and so flush with deposits and so reputable as Silicon Valley Bank could kind of blink. And everybody's asking, where were the regulators, where, in reality, they kind of flew under the radar.

Media literacy : Do you think it should be made clearer in this story who was responsible for the Silicon Valley Bank collapse and ripple effects it had (closing of the 100-year old investment bank Credit Suisse)? Why is that information important? Alternative : See, Think, Wonder : What did you notice? What did the story make you think? What story would you want to find out more about? Where would you go to learn more?

For More

What students can do : Talk with a teacher, neighbor or family member about their thoughts on the 2008 financial crisis. What do they remember about it? What were the conversations like at the time? What was the "mood" of the country? What did they think about the regulations put in place after?

 

Senator Elizabeth Warren questions Treasury Secretary Janet Yellen during the Senate Banking, Housing, and Urban Affairs Committee hearing. May 10, 2022. Tom Williams/Pool via REUTERS Another perspective : Learn what Sen. Elizabeth Warren, a long-time supporter of regulating the banks, has to say about the current banking crisis: Elizabeth Warren says Fed chair ‘failed’ and calls for inquiry into bank collapse: Progressive Democrat launches offensive on politicians on the left and the right who supported Trump-era deregulation of US banks (The Guardian)

Student Video of the Day

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C3 Standards for Economics : D2.Eco.1.6-8. Explain how economic decisions affect the well-being of individuals, businesses, and society. D2.Eco.1.9-12. Analyze how incentives influence choices that may result in policies with a range of costs and benefits for different groups. Fill out this form to share your thoughts on Classroom’s resources. Sign up for NewsHour Classroom’s ready-to-go Daily News Lessons delivered to your inbox each morning.