The financial system is slipping into state control

There exists a centuries-old and fathoms-deep relationship between finance and the state. The great banking houses, such as the Medicis of Florence, were lenders of last resort to rulers at risk of being overthrown. Financiers had to avoid backing losers, who would be unable to repay debts. Now it is banks that threaten to bring down the state; a switch that has led to more and more oversight from official organs. Things shifted sharply a century ago, with intervention in the Depression. The global financial crisis of 2007-09 reinforced the trend. Recent turmoil has pushed the banking system further along the path to state control.

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On May 11th the Federal Deposit Insurance Corporation, an American regulator, revealed that the country’s big banks face a bill of $16bn for losses associated with the failures of Silicon Valley Bank (svb) and Signature Bank. They will…

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