UPDATE: Speech: FDIC Chairman Martin J. Gruenberg at the Brookings Institution: Three Financial Crises and Lessons for the Future
SPEECH | JANUARY 14, 2025
(Updated to Correct
Date)
FDIC Chairman Martin J. Gruenberg at the Brookings
Institution: Three Financial Crises and Lessons for the
Future
I would like to thank the Brookings Institution, and my
friend Aaron Klein, for giving me the opportunity to speak to you
today.
For better or worse, over the course of my career, I
have had the opportunity to participate in the response to three
financial crises – the thrift and banking crisis of the 1980s and
early 1990s as a member of the staff of the Senate Banking Committee,
the Global Financial Crisis of 2008 as Vice Chairman of the FDIC, and
the three large regional bank failures in the spring of 2023 as FDIC
Chairman.
As I look back on those experiences, I am struck by
the commonality of the causes of those crises –interest rate and
liquidity risk, concentrations of assets and deposits, leverage, rapid
growth, inadequate capital, new activities and products whose risks
were poorly understood, interconnection with non-bank financial
companies, poor bank management, and failures of supervision and
regulation to identify and address those risks, and in some cases
exacerbating them.
As I leave the FDIC, I thought there might
be value in sharing some of the lessons of that experience as we head
into a period of uncertainty about the future path of financial
regulation in the United States and globally. In particular, I offer
the observation that while innovation can greatly enhance the
operation of the financial system, experience suggests it be tempered
by careful and prudent management and appropriate regulation and
supervision.
Read Chairman Gruenberg's Full Speech
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