SVB Collapse Shows Smaller Banks Can Pose Risk in Numbers

Former regulators say Washington has been too focused on ‘too big to fail’ banks

Photo-illustration by Alexandra Citrin-Safadi/The Wall Street Journal; Photos: Andrew Harrer/Bloomberg News, saul loeb/Agence France-Presse/Getty Images, David Paul Morris/Bloomberg News

WASHINGTON—For 15 years, regulators and legislators have assumed the biggest risks to the financial system came from a handful of “too big to fail” banks. 

This month’s failure of Silicon Valley Bank and Signature Bank—and last week’s bank-led rescue of a third lender, First Republic Bank—suggests that focus on size may have blinded officials to the threat posed by smaller lenders, observers and former regulators say.

What's News

Continue reading your article with
a WSJ subscription

Subscribe Now

Already a subscriber? Sign In

Sponsored Offers