Chapter
Risk of Bank Liquidity Failure
02:15 - 10:27 (08:12)
Silicon Valley Bank faced liquidity failures when tech companies withdrew their uninsured deposits because of fear and risk. The government set liquidity goals and stress tests after the 2008 financial crisis for banks up to $250 billion.
Clips
The fear of uninsured deposits can lead to liquidity failures in banks, which may then necessitate backstopping not only the two major banks but also regional banks.
02:15 - 05:20 (03:04)
Summary
The fear of uninsured deposits can lead to liquidity failures in banks, which may then necessitate backstopping not only the two major banks but also regional banks. The FDIC has a perfect record of protecting insured deposits, and it plans to cover all uninsured deposits in the two banks mentioned.
ChapterRisk of Bank Liquidity Failure
EpisodeMaking Cents of SVB’s Collapse With Mark Cuban and Sheila Bair
PodcastThe Problem With Jon Stewart
The CEO of Silicon Valley Bank underestimated the risk of uninsured accounts as he thought the risk would only be realized if there was a run on the bank which ended up happening.
05:20 - 10:27 (05:07)
Summary
The CEO of Silicon Valley Bank underestimated the risk of uninsured accounts as he thought the risk would only be realized if there was a run on the bank which ended up happening. The community of tech companies that banked with Silicon Valley Bank made room to withdraw their money when they recognized the trouble and this affected the bank significantly.