The Problem With Jon Stewart
Making Cents of SVB’s Collapse With Mark Cuban and Sheila Bair
Wed Mar 15 2023
- The FDIC was created during the Great Depression to prevent bank runs and still exists today to backstop deposits.
- Silicon Valley Bank's high percentage of uninsured deposits was a risk that ultimately led to its collapse.
- The rollback of liquidity goals for banks between $50 billion and $250 billion in 2018 was a mistake, and normal regulation is difficult for these banks to undertake.
- Dodd-Frank and Glass-Steagall were put in place to prevent situations like Silicon Valley Bank's failure.
- The current $250,000 cap on deposit insurance is not enough to protect small depositors and businesses.
- The government should provide emergency insurance for transaction accounts to protect them.
- Silicon Valley's ethos of risk-taking is undermined by the government's tendency to bail out big tech companies, creating an unfair advantage and a lack of true risk.
- The bank failure primarily affected large depositors, including some with hundreds of millions of dollars.
- The failure to backstop foreclosures is a systemic problem.
- Lobbying against regulators makes it difficult for them to crack down on banks.
- Trust is the ultimate product for the US banking system, and Congress needs to change laws to make banks more conservative and protect all deposits.
- Billionaire and millionaire investors have relaxed banking rules, leaving everyday people vulnerable.
- The moral hazard for incompetent bankers needs to be addressed with accountability and pain felt by those who have performed poorly.
- The loosening of regulations on stress testing for banks has led to problems being hidden until a bank run occurs.