Bankruptcy Silicon Valley Bank (SVB) gave two lessons. First, when a bank fails, those depositors who are not protected by the state insurance system can suddenly spin out of control and play a key role.

Another lesson is that the watchdogs of the financial system have little control over banks which are growing at an excessive rate. Selling SVB to your competitor Bank shares of the first citizens it touches the first lesson and reinforces the seriousness of the second. Over the weekend, First Citizens secured $110 billion worth of SVB assets at a significant discount of $16.5 billion off their book value. On Monday morning, the market value of the North Carolina-based family banking group jumped nearly $4 billion. It’s easy to see why. Bank mergers are generally not tolerated by regulators: a takeover by CIT rival First Citizens was under scrutiny for more than a year until it was completed in January 2022.

And for her Federal Deposit Insurance Corporation (FDIC), which sells SVB, First Citizens CEO Frank Holding is a familiar face. Since 2009, his bank has acquired at least 15 failed financial houses, according to the watchdog’s database.

The biggest sacrifice that the authorities make is that they allow the buyer to grow from a small group to a huge one.

Bank bailouts require hard decisions to be made under pressure, as shown by the Swiss watchdog, which loosened rules to allow UBS to acquire Credit Suisse a week ago. In the case of SVB, the FDIC has now agreed to cover some potential losses on its loan portfolio. However, the biggest sacrifice that the Authorities make is that they allow the buyer to grow from a small group to a huge one. The CIT purchase doubled First Citizens’ assets, while the SVB takeover doubled them again to $219 billion.

And for Frank Holding, head of First Citizens, this means that his bank has dived deep into activities that until recently it hadn’t even touched, such as lending to innovative investment funds. But regulators, including the Federal Reserve, have yet to explain how they allowed SVB, once as big as First Citizens, to now end up so badly. Michael Barr, head of bank supervision, told Congress on Monday that adjusting rules for banks based on their size is part of an ongoing reform.

These are the problems of tomorrow. So far, banking regulators have been able to find a solution for Silicon Valley Bank that doesn’t involve splitting it piece by piece, preventing really big banks like JPMorgan and Bank of America from getting bigger. This will entail political risk.

This decision returns the risk that the bank will be considered “too big to fail.”