▪️This meme is an ignorant historical fantasy. It’s sort of funny that they say there was a bank crisis “almost every 10 years” (which could often mean 15+ years) and then use an 8 yr period, 2010-18, as some sort of victory. But this silly narrative ignores the real reason for bank crises.

▪️Ironically, the Savings and Loan crisis of the 1980s resulted from bank regulations, many of which dated back to FDR in the 1930s. For example, the govt limited the interest rates S&Ls were allowed to pay, which caused depositors to flee when they could get better returns elsewhere.
https://www.econlib.org/library/Enc/SavingsandLoanCrisis.html

▪️They were also limited on the mortgage rates they were allowed to charge, which types of loans they could make, banned from issuing adjustable rate mortgages, and highly localized because they were banned from operating across state lines.

▪️Even worse, the government’s deposit insurance (extended to S&Ls in 1934) charged every institution the same rates regardless of their risk. This set up a highly regulated industry with perverse incentives that was ripe for a crisis.

▪️What precipitated the S&L crisis was the inflation of the 1970s, which caused the Fed to rapidly raise interest rates. This left S&Ls with a bunch of mortgages that were at lower rates, while they had to pay higher interest on deposits. By 1982, the entire S&L industry had a negative net worth!

▪️In attempt to save the already doomed S&Ls, the govt tried a bunch of interventions, mostly dumb, instead of letting the zombie S&Ls fail. Some of these included “deregulating” the industry by letting banks make riskier loans and reducing capital standards.

▪️This exacerbated the crisis as banks gambled on risky strategies to become whole again. It ended up making the problem, and ensuing bailouts, much larger. But the fundamental cause was inflation, which caused rising interest rates in a highly regulated industry, precipitating a banking crisis.

▪️Which is what is happening now. We had a decade of 0% interest rates, where banks acquired lots of low yielding bonds, like US Treasuries, which were considered safe and encouraged by the govt.

▪️Now that rates have risen to fight inflation, these bonds are worth much less, while depositors are demanding higher rates. The fundamental problem was central banks holding rates so low for so on, not by “deregulation.”

▪️Notice, no one can point to a specific repealed regulation that would have prevented these bank failures. In reality, the banking sector is one of the most, if not the most, regulated industries. It’s just a mythical narrative, much like this meme’s supposed history of bank crises.