Category: bank collapse

The State of U.S. Banking One Year after the Failure of Silicon Valley Bank

In March 2023, First Citizens Bank agreed to buy SVB after SVB had been taken over by the FDIC. (Photo courtesy of Lena Buonanno.)

On Wednesday, March 8, 2023, Silicon Valley Bank (SVB), headquartered in Santa Clara in the heart of California’s Silicon Valley surprised its depositors and Wall Street investors by announcing that in order to raise funds it had sold $21 billion in securities at a loss of $1.8 billion. The announcement raised concerns about the bank’s solvency—that is, there were questions as to whether the value of the bank’s assets, including bonds and other securities, was greater than the value of the bank’s liabilities, primarily deposits. The result was a run on the bank as depositors withdrew most of their funds. On Friday, March 10, 2023, the Federal Deposit Insurance Corporation (FDIC) took control of SVB before the bank could open for business that day.

Mandatory Credit: Photo by GEORGE NIKITIN/EPA-EFE/Shutterstock (13817875h)

The run on SVB in 2023 resembled …

bank runs during the 1930s.

In this blog post, we discuss the economics of bank runs and go into detail on what happened to SVB. In response to the failure of SVB, the FDIC declared that selling the bank’s assets and forcing depositors above the $250,000 deposit limit to suffer losses would pose a systemic risk to the financial system. As a result, with concurrence of the FDIC’s Board of Directors, two-thirds of the Fed’s Board of Governors, and Treasury Secretary Janet Yellen, the FDIC announced that all deposits in SVB—including deposits above the normal $250,000 dollar limit—would be insured. The waiving of the deposit insurance limit was also applied to Signature Bank, which failed a few days later. The run on SVB had been set off by the loses the bank had experienced on its long-term Treasury bonds. To reassure depositors in other banks that also held long-term debt, the Fed announced that it was establishing the Bank Term Funding Program (BTFP). Banks and other depository institutions, such as savings and loans and credit unions, can use the BTFP to borrow against their holdings of Treasury and mortgage-backed securities.

Maturity Mismatch and Moral Hazard

The failure of SVB highlighted two problems in commercial banking.

  1. Maturity mismatch. Banks use short-term deposits to fund long-term investments, such as mortgage loans and purchases of Treasury bonds. In other words, banks fund investments in long maturity assets using short maturity liabilities. The resulting maturity mismatch causes two problems: 1) If, as happened at SVB, the bank experiences a run and needs to pay off depositors, it may only be able to do so by selling assets at a loss, which may push the bank to insolvency; and 2) bonds with long maturities are subject to greater interest rate risk than are bonds with shorter maturities: If market interest rates rise, the prices of long-term bonds fall by more than do the prices of short-term bonds. To compensate investors for this greater interest rate risk, long-term bonds typically have higher interest rates than do short-term bonds. (We explain these points in Money, Banking, and the Financial System, Chapter 5, Section 5.2.) The higher interest rates can lead a bank’s managers to invest deposits in long-term bonds in order to earn higher interest rates and boost the bank’s profits, even though they are taking on greater risk by doing so. The decision of SVB’s managers to hold a large number of long-term bonds greatly contributed to the failure of the bank.
  2. Moral hazard. Why might bank managers take on more risk by buying long-term bonds and potentially making other risking investments, such as making commercial real estate loans? For instance, recently, New York Community Bancorp suffered losses on loans made to buyers of office buildings and apartments. A key to the explanation is the extent of moral hazard in banking. In the financial system—including banking—moral hazard is the problem investors experience in verifying that borrowers are using their funds as intended. Although we don’t usually think of bank depositors as being investors who lend their money to banks, in effect, that is the relationship depositors and banks are in. Banks borrow depositors money and use these funds to make a profit. Bank managers are typically rewarded on the basis of how profitable the bank is. As a result, bank managers may make riskier investments than depositors would make if depositors were deciding which investments to make.

In principle, depositors could monitor which investments a bank’s managers are making and withdraw their deposits if the investments are too risky. In practice, depositors rarely monitor bank managers for two key reasons: 1) Depositors often lack the information to accurately gauge the risk of an investment; and 2) Depositors are insured by the FDIC for up to $250,000 per deposit per bank. When a bank fails, the FDIC typically makes insured depositors funds available with no delay, often by establishing a “bridge bank” to continue the failed banks operations, including keeping ATMs open and stocked with cash. Deposit insurance increases the extent of moral hazard in the banking system. If depositors come to believe that in practice even deposits above the $250,000 are insured because of the actions bank regulators took the following the failures of SVB and Signature Bank, moral hazard is further increased. Still, reason 1. above gives reason to believe that, even in the absence of deposit insurance, depositors are unlikely to closely monitor bank managers. If depositors suddenly receive new information on a bank’s health—as happened when SVB suffered a loss on its sale of Treasury bonds—the likely result is a run. Runs potentially can lead other bank managers to become more cautious in their investments, but it will be too late to change the behavior of the managers of a bank that closes because of a run.

Bank Leverage

Because banks are highly leveraged, they are less able to withstand declines in the prices of their assets without becoming insolvent. A business is insolvent if the value of its assets is less than the value of its liabilities. Ordinarily, the FDIC will close an insolvent bank. A bank’s leverage is the ratio of the value of a bank’s assets to the value of its capital. A bank’s capital equals the funds contributed by the bank’s shareholders through their purchases of the bank’s stock plus the bank’s accumulated earnings. Put another way, a bank’s capital represents the value of the bank’s shareholders’ investment in the bank.

Shareholders focus on the return on their investment (ROI). Because banks are highly leveraged, a relatively small return on the banks assets—such as loans and mortgages—can result in a large return on the shareholders’ investment. This relationship holds because the shareholders’ investment (the bank’s capital) is much smaller than the bank’s assets. But just as high leverage increases a bank’s profits if the bank earns a positive return on its assets, it also increases a bank’s losses if the bank suffers a negative return on its assets. Banks would have a greater ability to absorb losses on their investments without becoming insolvent if the banks had more capital. But the more capital banks hold relative to the value of their assets—in other words, the less leveraged a bank is—the smaller the profit banks earn for a given return on their assets. Just as moral hazard can lead bank managers to make riskier investments than their depositors would prefer, it can also lead bank managers to become more leveraged than their depositors would prefer.

Regulatory Responses to the Failure of SVB

As we’ve noted, the problems that led to the failure of SVB were rooted in the problems that all commercial banks are subject to. (The reasons why SVB turned out to be particularly vulnerable to a bank run are discussed in this earlier blog post.) Although there have been extensive discussions among federal regulators, including the Federal Reserve and the FDIC, about steps to increase the stability of the U.S. banking sector, as of now no significant regulatory changes have occurred. However, there have been a number of proposals that regulators have been considering.

  1. Increased capital. As we noted, banks hold relatively little capital relative to their assets. On average, U.S. commercial banks hold capital equal to about 9.5 percent of the value of their assets. Holding more capital would reduce bank leverage, making banks less vulnerable to declines in the value of their assets. More capital would also mean that banks have more funds available to pay out to depositors making withdrawals during a run. In regulating bank capital, the United States has largely followed the Basel accord, which was established by the Bank for International Settlements (BIS). We discuss the Basil accord in Money, Banking, and the Financial System, Chapter 12, Section 12.4. Here we can note that the most recent proposed capital regulations are Basel III, sometimes called the “Basel III Endgame.”

Basel III would require large banks to hold more capital. The proposal has been heavily criticized by the banking industry. Some economists strongly support banks holding more capital to increase the stability of the banking system, but other economists are more skeptical. These economists argue that even if banks held twice as much capital as they currently do, it would likely prove insufficient to meet depositor withdrawals in bank run similar to the one SVB experienced. Holding more capital is also likely to reduce the volume of loans that banks will be able to make. Finally, the problems in the banking system in recent years have typically involved mid-sized regional banks rather than the large banks—those holding more than $100 billion in assets—that are the focus of Basel III. In any event, in testimony before Congress earlier this month, Fed Chair Jerome Powell stated that: “I do expect that there will be broad and material changes to the proposal.” His statement makes it likely that the United States won’t fully adopt the proposed Basel III regulations in their current form.

2. Revising deposit insurance. The establishment of the FDIC in 1934 stopped the bank runs that had seriously damaged the U.S. economy during the early 1930s. Because of deposit insurance, people knew that they didn’t have to quickly withdraw their funds from a bank experiencing losses because even if the bank failed, deposits were insured. But, as we noted earlier, deposit insurance also increases moral hazard in banking by reducing the incentive of depositors to monitor the investments bank managers make. One proposed reform would increase deposit insurance for accounts held by households and small and mid-sized firms because these deposits are less likely to be quickly withdrawn if a banks experiences difficulties and because these depositors are less likely to be able to monitor bank managers. Large firms, investors, and financial firms would not be eligible for the increased deposit insurance. (Under Basel III, banks might be required to hold additional liquid assets so that they would be able to have funds available to meet sudden withdrawals by large firms, investors, and financial firms. It was withdrawals by those types of depositors that led to SVB’s failure.)

3. Increased use of the Fed’s discount window. Congress established the Federal Reserve in 1914 partly in response to the bank panics that plagued the U.S. financial system during the 19th and early 20th centuries. The Federal Reserve Act was intended to allow the Fed to serve as a lender of last resort by making discount loans to banks having temporary liquidity problems as a result of deposit withdrawals. In practice, however, banks were often reluctant to borrow at the Fed’s discount window because they were afraid that discount borrowing came with a stigma indicating that the bank was in trouble. As a result, discount lending has not played a significant role in stopping bank runs. For instance, SVB had not prepared to request discount loans and so weren’t able to use discount loans to provide the funds needed to meet deposit withdrawals. Some economists and policymakers have proposed requiring banks to provide the Fed with enough collateral, primarily in the form of business and consumer loans, to meet their liquidity needs in the event of a run. By identifying sufficien collateral ahead of time, banks would be able to immediately receive discount loans in an emergency. If SVB had provided collateral equal to the value of its uninsured deposits, it might have been able to withstand the run that occurred.

4. Require more securities to be marked to market. Banking regulations allow banks to keep bonds and other securities on their balance sheets at face value even if the market value of the securities has declined, provided the securities are identified as being held to maturity. When a bank experiences liquidity problems it may be forced to sell securities that it previously designated as being held to maturity, which is the situation SVB found itself in. Some economists and policymakers have proposed that more—possibly all—of a bank’s holdings of securities be “marked to market,” which means that the securities’ current market values rather than their face values would be used on the bank’s balance sheet.  Economists and policymakers are divided in their opinions on this proposals. Marking more securities to market may give depositors and investors a clearer idea of the true financial health of a bank. But doing so might also be misleading because banks will not take losses on those securities that they actually hold until maturity.

5. Bank examiners become more focused on emerging threats. Some economists and policymakers argue that in practice bank examiners from the FDIC, the Fed, and the Office of the Comptroller of the Currency (which regulates larger banks) are in the best position to determine whether bank managers are taking on too much risk, particularly as economic conditions change. For example, as the Federal Reserve began to increase its target for the federal funds rate in the spring of 2022, other interest rates also rose, causing the prices of long-term bonds to fall. In retrospect, bank examiners overseeing SVB and other banks were slow to question the managers of these banks about the degree of risk involved in their investments in long-term bonds. Similarly, bank examiners were slow to realize the risk that banks like SVB were taking in relying on deposits above the $250,000 insurance limit. These depositors are likely to be the first to withdraw funds in the event of a bank encountering a problem. In principle, if bank examiners were more alert to the effect changing economic condidtions have on the riskiness of bank investments, the examiners might be able to prod bank managers to reduce their risky investments before a crisis occurs.

6. Further consolidation of the banking system. As we discuss in Money, Banking, and the Financial System, Chapter 10, Section 10.4, for many years restrictions on banks operating in more than one state resulted in the United States having many more banks than is true of other high-income countries. In the mid-1990s, after Congress authorized interstate banking, a wave of consolidation in the banking industry resulted in some banks operating nationwide. However, the United States still has many small and mid-size, or regional, banks. The largest banks have typically not encountered liquity problems or experienced runs. Some economists and policymakers have argued that further consolidation could lead to a banking system in which nearly all banks had the financial resources to withstand bank runs. Other economists and policymakers argue, however, that small businesses often rely for credit on smaller community banks. These banks engage in relationship banking, which means that they have long-term relationships with borrowers. These relationships enable the banks to accurately assess the creditworthiness of borrowers because the banks possess private information on the borrowers. Larger banks are more likely to use standard algorithms to assess the creditworthiness of borrowers. In doing so a larger bank may refuse to make loans that a community bank would have made. As a result, further signficant consolidation in the banking system might make it more difficult for small businesses to access the credit they need to operate and to expand.

Finally, as we note in Chapter 12 of Money, Banking, and the Financial System, government regulation of banking has followed a familiar pattern dating back decades. When banks or another part of the financial system, experience a crisis, Congress, the president, and the regulatory agencies respond with new regulations. The regulations, though, can lead financial firms to innovate in ways that undermine the effects of the regulation. If these financial innovations result in a crisis, the government reponds with additional regulations, which lead to new financial innovations. And so on. The nature of banking and the many other channels through which funds flow from savers and investors to borrowers are sufficiently varied and evolve so quickly that it’s unlikely that any particular regulations will be capable of permanently stabilizing the financial system.

Glenn on Bank Regulation

(Photo from the Wall Street Journal.)

This opinion column first appeared on barrons.com. It is also on the web site of the American Enterprise Institute.

Runs at Silicon Valley Bank and others emerged quickly and drove steep losses in regional bank equity values. Regulators shouldn’t have been caught by surprise, but at least they should take lessons from the shock. The subsequent ad hoc fixes to deposit insurance and assurances that the banking system is sufficiently well-capitalized don’t yet suggest a serious policy focus on those lessons. Calls for much higher levels of bank capital and tighter financial regulation notwithstanding, deeper questions about bank regulation merit greater attention.

Runs are a feature of banking. Banks transform short-term, liquid (even demandable) deposits into longer-term, sometimes much less liquid assets. Bank capital offers a partial buffer against the risk of a run, though a large-scale dash for cash can topple almost any institution, as converting blocks of assets to cash quickly to satisfy deposit withdrawals is almost sure to bring losses. The likelihood of a run goes up with bad news or rumors about the bank and correlation among depositors’ on their demand for funds back. That’s what happened at Silicon Valley Bank. Think also George Bailey’s impassioned speech in the classic movie It’s a Wonderful Life, explaining how maturity and liquidity transformations can unravel, with costs to depositors, bankers, and credit reductions to local businesses and households. The bank examiner in the movie, eager to get home, didn’t see it coming.

While bank runs and banking crises can be hard to predict, a simple maxim can guide regulation and supervision: Increase scrutiny in areas and institutions in which significant changes are occurring over a short period. On an aggregate level, the sharp, rapid increase in the federal funds rate since March 2022 should have focused attention on asset values and interest rate risks. So, too, should the fast potential compression in values of office real estate in many locations as a consequence of pandemic-related working shifts and rate hikes. At the bank level, significant inflows of deposits—particularly uninsured deposits—merit closer risk review. This approach isn’t limited to banking. A recent report of the Brookings-Chicago Booth Task Force on Financial Stability, co-chaired by Donald Kohn and me, put forth a similar change-based approach to scrutiny of nonbank financial institutions.

Such an approach would have magnified supervisory attention to Silicon Valley Bank and First Republic Bank . It also suggests the desirability of greater scrutiny and stress testing of midsize banks generally facing interest rate and commercial real estate risk. Those stress tests can give the Fed and the Federal Deposit Insurance Corp. an indication of capital adequacy concerns that could give rise to mergers or bank closures.

Even with this enhanced regulatory and supervisory attention, two major questions remain: For bank liabilities, what role should deposit insurance play in forestalling costly runs? For bank assets, what role should banks play in commercial lending?

Actions taken since Silicon Valley Bank’s collapse have effectively increased deposit-insurance guarantees for troubled institutions. But the absence of a clearer policy framework for dealing with uninsured deposits dragged out the unwinding of First Republic Bank and threatens other institutions experiencing rapid deposit increases and interest rate risk. When regulators asserted in the wake of the runs that the status quo of a $250,000 limit remained unchanged, they lacked both credibility and a means to reduce uncertainty about future policy actions in a run. That makes runs at vulnerable institutions both more likely and more severe. One reform would be to increase deposit insurance limits for transaction accounts of households and small and midsize firms, as recently proposed by the FDIC. Of course, even this reform raises concerns about implementation, how to price the enhanced coverage, and whether supervision will shift toward the “focus on the changes” framework I outlined earlier.

Retaining a more modest role for deposit insurance raises a larger question: What role should banks play in business lending for working capital, investment, and commercial real estate? The FDIC is mandated to resolve bank failures at the least cost to the deposit-insurance fund, but following that path may lead to more mergers of vulnerable institutions into the nations’ largest banks. While consolidation may mitigate risks for depositors with greater diversification of deposits, it leaves open effects on the mix of lending. Knowing local borrowers better, small and midsize banks have a prominent local lending presence in commercial and industrial loans and real estate. Whether such projects would be financed in a similar mix by local branches of megabanks is a question. Congress should consider whether other alternatives might be reasonable. It might permit consolidation among smaller institutions, even if more costly in resolution in the near term to taxpayers. Or nonbank institutions could be permitted to play a role in resolving troubled banks. The latter mechanism should be considered, as nonbank asset managers like Blackstone or BlackRock could fund loans originated by local banks.

Two lessons for regulation loom large. The first is that attention should be paid to policy risk management as well as bank risk management in identifying areas of concern. Think easy money and the reach for yield, inflationary fiscal and monetary policy during the pandemic, and the Fed’s rapid-fire increase in short-term rates to combat stubborn inflation. Second, regulators and Congress need to be wary of both too much deposit insurance (with likely increased risk-taking and pressure on supervision) and too little deposit insurance (with likely jumps in banking concentration and disruption of local credit to businesses).

One can reasonably anticipate additional erosion of capital in non-money-center banks from rising interest rates and lower office real estate collateral values, hopefully motivating a quick grasp of these lessons. While banks don’t have to mark assets to market if current and can survive turbulence until monetary policy eases, potential runs can upset this equilibrium. Declining regional bank stock prices make this risk clear. Only good fortune or a more thoughtful policy stand in the way of additional bank distress and attendant credit supply reductions.

The Fed Continues to Walk a Tightrope

Photo from the Associated Press of Fed Chair Jerome Powell at a news conference

At its Wednesday, May 3, 2023 meeting, the Federal Open Market Committee (FOMC) raised its target for the federal funds rate by 0.25 percentage point to a range of 5.00 to 5.25.  The decision by the committee’s 11 voting members was unanimous. After each meeting, the FOMC releases a statement (the statement for this meeting can be found here) explaining its reasons for its actions at the meeting. 

The statement for this meeting had a key change from the statement the committee issued after its last meeting on March 22. The previous statement (found here) included this sentence:

“The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.”

In the statement for this meeting, the committee rewrote that sentence to read:

“In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”

This change indicates that the FOMC has stopped—or at least suspended—use of forward guidance.  As we explain in Money, Banking, and the Financial System, Chapter 15, Section 5.2, forward guidance refers to statements by the FOMC about how it will conduct monetary policy in the future.

After the March meeting, the committee was providing investors, firms, and households with the forward guidance that it intended to continue raising its target for the federal funds rate—which is what the reference to “additional policy firming” means. The statement after the May meeting indicated that the committee was no longer giving guidance about future changes in its target for the federal funds rate other than to state that it would depend on the future state of the economy.  In other words, the committee was indicating that it might not raise its target for the federal funds rate after its next meeting on June 14. The committee didn’t indicate directly that it was pausing further increases in the federal funds rate but indicated that pausing further increases was a possible outcome.

Following the end of the meeting, Fed Chair Jerome Powell conducted a press conference. Although not yet available when this post was written, a transcript will be posted to the Fed’s website here. Powell made the following points in response to questions:

  1.  He was not willing to move beyond the formal statement to indicate that the committee would pause further rate increases. 
  2. He believed that the bank runs that had led to the closure and sale of Silicon Valley Bank, Signature Bank, and First Republic Bank were likely to be over.  He didn’t believe that other regional banks were likely to experience runs. He indicated that the Fed needed to adjust its regulatory and supervisory actions to help ensure that similar runs didn’t happen in the future.
  3. He repeated that he believed that the Fed could achieve its target inflation rate of 2 percent without the U.S. economy experiencing a recession. In other words, he believed that a soft landing was still possible. He acknowledged that some other members of the committee and the committee’s staff economist disagreed with him and expected a mild recession to occur later this year.
  4. He stated that as banks have attempted to become more liquid following the failure of the three regional banks, they have reduced the volume of loans they are making. This credit contraction has an effect on the economy similar to that of an increase in the federal funds rate in that increases in the target for the federal funds rate are also intended to reduce demand for goods, such as housing and business fixed investment, that depend on borrowing. He noted that both those sectors had been contracting in recent months, slowing the economy and potentially reducing the inflation rate.
  5. He indicated that although inflation had declined somewhat during the past year, it was still well above the Fed’s target. He mentioned that wage increases were still higher than is consistent with an inflation rate of 2 percent. In response to a question, he indicated that if the inflation rate were to fall from current rates above 4 percent to 3 percent, the FOMC would not be satisfied to accept that rate. In other words, the FOMC still had a firm target rate of 2 percent.

In summary, the FOMC finds itself in the same situation it has been in since it began raising its target for the federal funds rate in March 2022: Trying to bring high inflation rates back down to its 2 percent target without causing the U.S. economy to experience a significant recession. 

4/8/23 Podcast – Authors Glenn Hubbard & Tony O’Brien discuss the role of small banks in the US financial system in the wake of the recent bank failures.

Join authors Glenn Hubbard and Tony O’Brien as they discuss the future of small banks in the US financial system in the wake of recent bank failures. With a government that is guaranteeing just about all deposits, what is the role of deposit insurance. Small banks serve a real purpose in our economy and will further government regularly only complicate their mission. Other small business rely on small banks for their intimate knowledge of their market and of their business. However, many may now rely on larger banks that may seem a safer place over the next few years. Our discussion covers these points but you can also check for updates on our blog post that can be found HERE .

The FDIC Finds a Buyer for Silicon Valley Bank

First Citizens Bank, based in based in Raleigh, North Carolina has purchased Silicon Valley Bank. Photo from the Wall Street Journal.

When the Federal Deposit Insurance Corporation (FDIC) took over Silicon Valley Bank (SVB) on March 10, 2023, it kept the bank in operation by setting up a “bridge bank.” The Silicon Valley Bridge Bank kept SVB’s branches running and allowed depositors–including those with deposits above the FDIC’s $250,000 insurance limit–to withdraw funds. The Silicon Valley Bridge Bank borrowed from the Federal Reserve Bank of San Francisco to ensure that it had the funds available to meet deposit withdrawals.

The FDIC prefers to use bridge banks to operate failed banks for as short a time as possible. Typically, the FDIC will seize a bank on a Friday and ideally will have identified another commercial bank willing to purchase the seized bank by the start of business on the following Monday. Finding a bank to buy SVB proved difficult, however, for two reasons:

1. The Biden administration has been skeptical of increasing concentration in the banking industry. That fact may have kept the FDIC from attempting to recruit a large bank to buy SVB, or large banks may have been reluctant to buy SVB because they believed that the Federal Trade Commission or the antitrust division of the U.S. Department of Justice would have blocked the purchase or would have imposed restrictions on how the bank could be operated.

2. Following the Great Financial Crisis of 2008-2009, some banks that purchased failing financial firms found themselves having to deal with loans and securities that had declined in value and with lawsuits from investors in the bank. That history may have caused many banks to be reluctant to buy SVB.

After two attempts to auction SVB failed to attract a buyer, on Sunday, March 26, the FDIC announced that First Citizens Bank, a regional bank based in Raleigh, North Carolina had agreed to purchase SVB. Before the merger, First Citizens was the thirtieth largest bank in the United States, so its purchase of SVB would not significantly increase concentration in retail banking.

Under terms of the purchase, on Monday morning First Citizens began operating SVB’s 17 branches, which now become First Citizens’ branches, assumed responsibility for SVBs deposits, and received $70 billion in SVB’s assets, at a 16.5 percent discount. About $90 billion in SVB’s assets will remain with the FDIC until a buyer for them can be found. The FDIC believes it will have lost about $20 billion from its Deposit Insurance Fund (DIF) as a result of the SVB’s failure. The FDIC will use a special levy on commercial banks to replenish the DIF.

The FDIC’s announcement of First Citizens’ purchase of SVB can be found here.

3/13/23 Podcast – Authors Glenn Hubbard & Tony O’Brien discuss the collapse of SVB in the context of a classic bank run. Is it? Listen & find out.

Join authors Glenn Hubbard and Tony O’Brien as they review the collapse of Silicon Valley Bank (SVB) in the context of a classic bank run. What lessons can be learned to avoid other bank collapses in this unchartered economic territory? Will this become a contagion? Or, is it simply an example of a bank searching for additional return in an uncertain economic world? Our discussion covers these points but you can also check for updates on our blog post that can be found HERE.

An Old-Fashioned Bank Run: The Collapse of Silicon Valley Bank [This post will be updated as new information becomes available. Updated Monday morning March 13.]