The collapse of Silicon Valley Bank was totally avoidable.
— Rep. Katie Porter (@RepKatiePorter) March 11, 2023
In 2018, Wall Street pushed a deregulation bill that allowed banks like SVB to take reckless risks. It passed, even as I and many others warned of the risks.
I am writing legislation to reverse that law, S. 2155.
I was living in Austin during the S&L collapse (ask yer Grandpa 👴🏻!). It took the Texas real estate market with it. I still remember a local editorial cartoon showing a bunch of well-dressed guys in silly party hats clutching bottles of champagne, in a car in a ditch (get it?). And blaming bystanders for their plight.Even before I got to Congress, I warned how S. 2155 would destabilize the banking industry.
— Rep. Katie Porter (@RepKatiePorter) March 11, 2023
Here's what I said: pic.twitter.com/L3QFl9eYZd
Still four hours to vote in my totally scientific Twitter poll, about whether David Sacks panicking over a tech bank run is more amusing, accurate, or informative than the Twitter Files are. https://t.co/6q7LGZckAr
— emptywheel (@emptywheel) March 11, 2023
I went for “All of the above,” which is by far the most popular (if you can’t read the results).Resolved: @davidsacks panicking about a tech bank run is more ____ than Twitter Files.
— emptywheel (@emptywheel) March 10, 2023
What happened to Silicon Valley Bank?
— Alec Stapp (@AlecStapp) March 10, 2023
Perfect explanation from @matt_levine in one paragraph: pic.twitter.com/3HY0iQ8zFn
This explains all the whinging about the Fed and interest rates connected to this story.Always read the footnotes pic.twitter.com/WtByR9MC4M
— Alec Stapp (@AlecStapp) March 11, 2023
The lesson here is the same old lesson. 1. diversify. The bank was not diversified. They did not have a loan portfolio earning them money. They just took money in. 2. Only invest money you can afford to lose.
ReplyDeleteSeems these bankers are small, limited thinkers. They took the simple thought of: US Treasuries, safest place in the world and did not actually think through the mechanics of being a bank overall. Thus: We have a lot of cash, where should be put it to be safe. They did not think about the bank actually having to earn an income.