With the title «Banks are designed to fail- and they do» Martín Wolf has published in FT the best article on the crises of the regional banks of the United States. Unfortunately I cannot reproduce it here for intellectual property reasons but I will translate a few paragraphs to encourage reading it:
«Banks fail. When they do, those who stand to lose shout for a state bailout... This is how, crisis by crisis, we have created a banking sector that is private in theory, but in practice supervised by the State... it is a system that is essential for the functioning of the market economy but does not operate according to its rules. It is a disaster".
«Money is what you want to have to buy the things you need. This is true for families and businesses, which must pay suppliers and workers. That is why bank failures are calamities. But banks are not designed to be safe. While its deposit liabilities are assumed to be perfectly safe and liquid, its assets are subject to maturity, credit, interest rate and liquidity risks. They are institutions for good weather. In bad times, they fail, as depositors run away.
"The coupling of risky and often illiquid assets with liabilities that must be safe and liquid within undercapitalized, profitable, bond-paying institutions regulated by politically subservient and often incompetent public sectors is a calamity waiting to happen."
"Banks need radical change"