When the next banking crisis happens, remember that Trump and his loyalists weakened already short-handed regulatory agencies.
The Washington Post reported Monday that the Federal Deposit Insurance Corporation (FDIC) has rescinded more than 200 job offers for new bank examiners due to the federal hiring freeze imposed last week by President Donald Trump via executive order.
Bank examiners are key civil servants at the FDIC. These officials assess the safety and soundness of banks in the U.S., ensuring that they operate in accordance with the law and avoid excessive risks. Their overarching objective is to prevent bank failures.
According to the FDIC, a chronic shortage of examiners contributed to the March 2023 collapse of Signature Bank. Imagine that! Short-staffing an agency makes it impossible for said agency to carry out its duties.
Clearly, hiring and training 200 new examiners to increase regulatory capacity would be a step in the right direction. Preventing that from happening, as Trump and FDIC Acting Chair Travis Hill have done, increases the likelihood of additional bank failures.
This is worse than letting the fox guard the henhouse. This is tearing the whole henhouse down, enabling financial predators to feast without even the pretense of adequate oversight.
There will be another banking crisis. In 2023, we barely avoided an implosion of the economy. But U.S. history is replete with examples of times when we were not so lucky and banking crises crushed the real economy. If and when that occurs again, people need to remember what happened on January 27, 2025.