CNN Newsroom: Interview With Rep. Ritchie Torres (D-NY)
Interview
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Well, the sheer speed of the Silicon Valley Bank run is historically unprecedented. So by way of illustration consider the following comparison. Washington Mutual, which was the largest bank failure in American history, saw the loss of $16.7 billion over the course of 10 days. By contrast, Silicon Valley Bank so the loss of 42 billion in the span of a few hours.
The difference between then and now is social media. Social media has the power to amplify financial panic to an extent on a scale and at a pace that we've never seen before. And so I have legislation that would require banking regulators to consider a new kind of financial risk, social media risk, which has become a factor in causing bank runs.
And one concern I have is that a foreign adversary, a malicious foreign adversary, could manufacture financial panic on social media in order to destabilize the American banking system. So that's a national security risk that we have to bear in mind as we move forward.
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I mean, we should do both. I mean, the banks themselves should monitor what is happening on social media, but it's important for the regulators to know whether financial panic, whether a bank run is coming so that we can intervene. Whenever there's a bank run in the making, time is of the essence. The sooner we can intervene. The quicker we can prevent a crisis. So it's all about ensuring that we're proactive and preventing a contagion from spreading to the broader banking system.
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I mean, I'm in favor of unlimited deposit insurance for a limited period of time so that we can stabilize the banking system. I believe that the Federal Reserve should have put a pause on interest rates. Because these interest rates -- there's just too much happening too fast, and it's destabilizing the banking system.
It's also worth noting that the banks are sitting on more than $600 billion in unrealized losses from securities. A powerful case could be made that the Federal Reserve should purchase those securities and remove those losses from bank balance sheets. Because the problem is not the quality of the assets, the problem is that the duration. These are long term assets and their values actually has the ability exactly right.
So these are valuable assets and so there would be no harm in purchasing them and stabilizing the banking system.
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