Great read as usual Mr. Barro. I agree that I don't like the fact that some people have coined the term "bailout" to equal something bad or not worth doing, don't even get me started on the PPP loan fiasco. That said you brought up a good point about how regulators missed this, but I'm not surprised as these are the same people that igno…
Great read as usual Mr. Barro. I agree that I don't like the fact that some people have coined the term "bailout" to equal something bad or not worth doing, don't even get me started on the PPP loan fiasco. That said you brought up a good point about how regulators missed this, but I'm not surprised as these are the same people that ignored Madoff's ponzi scheme for almost a decade. I tend to believe that the FDIC and SEC don't actually not know what is going on, I think they don't have the teeth to really go after people, banks and organizations that aren't following the rules because they aren't as independent or supported by our government as they should be. JPM released an analysis on SVB and it seems pretty spot on and even unsurprising from their POV.
> "S.V.B. suffered from a toxic mix of risky management and weak supervision. For one, the bank relied on a concentrated group of tech companies with big deposits, driving an abnormally large ratio of uninsured deposits. This meant that weakness in a single sector of the economy could threaten the bank’s stability." -> This I wholeheartedly agree with.
Great read as usual Mr. Barro. I agree that I don't like the fact that some people have coined the term "bailout" to equal something bad or not worth doing, don't even get me started on the PPP loan fiasco. That said you brought up a good point about how regulators missed this, but I'm not surprised as these are the same people that ignored Madoff's ponzi scheme for almost a decade. I tend to believe that the FDIC and SEC don't actually not know what is going on, I think they don't have the teeth to really go after people, banks and organizations that aren't following the rules because they aren't as independent or supported by our government as they should be. JPM released an analysis on SVB and it seems pretty spot on and even unsurprising from their POV.
https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/eye-on-the-market/silicon-valley-bank-failure-amv.pdf
Additionally, what did you think of Warrens write up in the Times about this? https://www.nytimes.com/2023/03/13/opinion/elizabeth-warren-silicon-valley-bank.html?smid=url-share
> "S.V.B. suffered from a toxic mix of risky management and weak supervision. For one, the bank relied on a concentrated group of tech companies with big deposits, driving an abnormally large ratio of uninsured deposits. This meant that weakness in a single sector of the economy could threaten the bank’s stability." -> This I wholeheartedly agree with.