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My memory may not be crystal clear either, it’s 9 years since I left the FDIC. I worked in the section that oversaw loan servicers . We did our jobs well, good group of people .

Seeing those police officers outside the bank brought back memories. At a closing in Missouri, one overheard my phone call with a contractor who was not doing what he was supposed to be doing. Let’s just say it was a “terse” call.

The police officer said, “you guys are tough!” Lol, good times. I told him it was the ex-military in me.

My view of bank regulation gradually became jaundiced over the years. The people doing the work tend to be of fine quality as individuals, but, due to political and bureaucratic constraints and occasional malpractice or corruption, the overall system works so slowly that, like the CDC, instead of preventing an outbreak of illness, the best that it can usually do is to try to ease the suffering a bit and quarantine the afflicted in order to slow the spread.

I'll spare you a litany of personal anecdotes but offer the topical point that the collapse of Silicon Valley Bank was predictable. Indeed, the interest rate risk to loan and investment portfolios that brought it down ought to have been recognized and warned of by regulators as an obvious and likely result of a return of inflation after a too long maintained policy of low interest rates by the Fed and other central banks.

Now, hedge fund, bank, and regulatory staffs are working late and running models to assess the potential for contagion and other systemic risks. A bright second semester sophomore in macroeconomics in college though could see the problem coming. Yet regulatory authorities would not or could act lest they be seen as unfriendly to the Biden administration's inflationary policies.

Will banking regulators be able to heroically plug the leaks in the dikes and prevent a market panic and potential impairment or collapse of one or more sectors of the financial system? Will a general bailout be necessary? Maybe, maybe not. The drama and angst though will serve a useful purpose in obscuring the greater issue: why weren't smart and powerful agencies able to anticipate and act against such an obvious danger?