Blame government for the new banking crisis.
Join investment adviser Lyn Alden, economist Arnold Kling and Reason's Zach Weissmueller for a discussion of the Silicon Valley Bank meltdown and bailout of depositors.
"We have learned over the last few days that many small and mid-sized banks in this country are Zombies," writes Arnold Kling, a senior scholar at the Mercatus Center at George Mason University and former economist for the Federal Reserve system and Freddie Mac.
Following the run on Silicon Valley Bank, former U.S. Treasury Secretary Larry Summers urged the federal government to guarantee the money of all the bank's depositors and warned that "now is not the time for lectures about moral hazard." But Kling insists that "past crises," such as the savings and loan collapse of the 1980s, "were bungled by authorities who were blind to the moral hazard problem."
And Lyn Alden, founder of Lyn Alden Investment Strategies, says "banks are basically highly-leveraged bond funds with payment services attached, and we treat it as normal to keep our savings in them." She argues that the Federal Reserve makes it nearly impossible for banks to hold the bulk of their customers' deposits in cash because "regulators want banks to be reasonably safe, but not 'too safe.' They want all banks to be leveraged bond funds to a certain degree, and won't allow safer ones to exist."
Join Reason's Zach Weissmueller this Thursday at 1 p.m. E.T. for a discussion about the federal government's decision to guarantee all deposits at the failed Silicon Valley Bank with Alden and Kling. Watch and leave questions and comments on the YouTube video above or on Reason's Facebook page.
Photo credit: Shen Hong / Xinhua News Agency/Newscom
Show notes:
Balaji Srinivasan on how “the Fed caused the crisis” - https://twitter.com/balajis/status/1634301417774268416?s=20
Federal Reserve: What is forward guidance? - https://www.federalreserve.gov/faqs/what-is-forward-guidance-how-is-it-used-in-the-federal-reserve-monetary-policy.htm
Brad DeLong on the need for a lender of last resort - https://braddelong.substack.com/p/saturday-night-thoughts-on-the-need
Thomas Massie Tweet about regulating financial speech on social media - https://twitter.com/RepThomasMassie/status/1635074378454147074?s=20
Larry Summers on Bloomberg: “Now is not the time for lectures about moral hazard”: https://www.youtube.com/watch?v=ID3ttHE2mpc
CNBC: Why Regulators Seized Signature Bank - https://www.cnbc.com/2023/03/13/signature-bank-third-biggest-bank-failure-in-us-history.html
Lyn Alden: A Look at Bank Solvency - https://www.lynalden.com/march-2023-newsletter/
FDIC: Unrealized Losses on Securites Held by Insured Banks - https://www.fdic.gov/news/speeches/2023/spfeb2823.html
-
1:09:01
ReasonTV
1 month agoWhat happened in Venezuela's election? | César Báez & Daniel Di Martino | Just Asking Questions
1.59K5 -
UPCOMING
Havoc
1 hour agoTainted Careers & Tarnished Legacies | Stuck Off the Realness Ep. 14
24 -
LIVE
Nerdrotic
3 hours agoAgatha All Along Geyest Show EVER! Rings of Power Girl POWER! - Friday Night Tights #320 Jonny Law
6,266 watching -
LIVE
Akademiks
6 hours agoDiddy Arrest Footage LEAKED! Police Say He's ON S*ICIDE watch after Being Locked up in MDC BROOKLYN
4,159 watching -
LIVE
Total Horse Channel
10 hours ago2024 WDAA World Championship Show | Friday | Arena One
159 watching -
4:16
steveinman
1 hour agoAnimals Gone Wild Compilation
701 -
2:22:56
WeAreChange
3 hours agoDiddy Will Get EPSTEINED?! The Power Brokers Are LOSING IT
29.4K20 -
1:56:20
Twins Pod
1 day agoWar Hero or War Criminal? | Twins Pod - Episode 31 - Eddie Gallagher
74.3K11 -
LIVE
2 MIKES LIVE
6 hours ago2 MIKES LIVE #119 Open Mike Friday!
217 watching -
LIVE
Quite Frankly
5 hours ago"Jail Accidents, Good Neighbors, Mixed Media, Calls " 9/20/24
276 watching