Normal Bank Failure

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Speaker A: You.

Speaker B: This ad free podcast is part of your Slate Plus membership.

Speaker B: Hello, welcome to the normal bank failure episode of Slate Money, your guide to the business and finance news of the week.

Speaker B: I’m Felix salmon of Axios.

Speaker B: Emily Peck of Axios is also here.

Speaker B: Elizabeth Spires is here.

Speaker A: Hello.

Speaker B: And yeah, we’re going to have a second bank episode in a row.


Speaker B: Last week was recorded before everything went completely bear shaped.

Speaker B: This week is recorded after everything went completely bear shaped.

Speaker B: So we are going to talk about Silicon Valley Bank, Signature Bank, Credit Suisse, First Republic, a little bit of silvergate.

Speaker B: We are going to dive into answering your questions.

Speaker B: Thank you for sending them in.

Speaker B: We are going to talk about monetary policy.

Speaker B: We’re going to talk about bank regulation, and basically we are going to explain what the h*** just happened.

Speaker B: It’s all coming up on Slate Money.

Speaker B: So let’s jump in with Silicon Valley Bank, which we did cover a little bit on the Slate Plus last week.


Speaker B: We talked all about the problem that it had many fewer assets than it did a year ago because interest rates went up and they owned a bunch of mortgage backed securities.

Speaker B: And we were chatting away about how this was potentially a problem for it.


Speaker B: And then it went from being potentially a problem to being an existential nightmare ending in its failure within about five minutes of our podcast coming out.

Speaker B: So, Elizabeth, you wrote about this in the paper of record.

Speaker B: What is the big headline here?

Speaker A: So the big headline I wrote about this because I was an Svb client, I guess I still am, but now it’s the Svb Bridge Bank.


Speaker A: The big headline is that so on Thursday the 9th, a lot of people who are Svb clients began pulling their deposits from the bank all at once.

Speaker A: And this caused a bank run.

Speaker A: And their rationale for doing so was that they believed the bank was insolvent.

Speaker A: The bank had invested deposits into longer term maturities.

Speaker A: That became problematic when interest rates went up.

Speaker A: So no bank is really equipped to deal with people pulling out deposits all at once.

Speaker B: It was $42 billion in one day, which is just an absolutely staggering amount of money.

Speaker B: The largest bank run in American history before Silicon Valley Bank was at Washington Mutual in 2008.


Speaker B: And that was $16 billion in ten days.

Speaker B: This was $42 billion in one day.

Speaker B: We have never seen anything like it.

Speaker B: And a bunch of people blamed Twitter and a bunch of people blamed the fact that Silicon valley bank’s depositor base was very small and they all knew each other and there was a bunch of venture capitalists who they were all on the same text threads.

Speaker B: But a lot of it was just the fact that there was a relatively small number of depositors in silicon Valley bank and it didn’t take that many of them to pull their money out.


Speaker B: They happened to have just enormous amounts of money on deposit.


Speaker B: One of the weirdnesses of Silicon Valley is that private companies, startups, would keep millions and millions of dollars just on deposit at the bank because they were far too busy building software or something to bother to put that money somewhere that it could earn interest.

Speaker B: And so, yeah, there weren’t very many of them.

Speaker B: They all knew each other.

Speaker B: There was rumors of a bank run and then the rational thing to do when you hear rumors of a bank run is to get your money out first.

Speaker B: And so there was just this enormous bank run.

Speaker A: And then what happened was so that happened on March 9, which was Thursday, and by Friday the bank’s stock trading in the bank’s stock was halted.


Speaker A: And then the Feds take control, the FDIC comes in, shuts down the bank, and everyone heads into the weekend with stomachaches, not knowing what’s going to happen, but thinking that the FDIC might find a buyer, which is a typical thing that can happen to a smaller bank.

Speaker A: And the question going into the weekend was what’s going to happen to the uninsured deposits at this bank?

Speaker A: And what was unusual, as you both have reported, is that most of the deposits at the bank were uninsured.

Speaker A: They were above the FDIC’s $250,000 cap.

Speaker A: So the question was like, will the venture capitalists be wiped out?


Speaker A: And then, of course, the chatter was, it’s not just venture capitalists, it’s struggling entrepreneurs and there’s payrolls to think about.


Speaker A: And then by Monday, the Fed said, everyone is going to depositors, are all going to be made whole.

Speaker A: Uninsured or not, we’re going to do these emergency measures and let people let banks borrow money from us and we’re going to let banks borrow on the full felix will explain this better.

Speaker A: But on the full value of their assets.

Speaker B: On the par value of their assets.

Speaker A: Yeah, the par value, right.

Speaker A: So they went to sell their assets, their securities, and they weren’t worth as much as they had said they were on their books, so they had to take a loss.


Speaker A: And the Fed is saying, if you don’t have to sell, you can just borrow on the par value.

Speaker A: It’s kind of a shenanigan, if you ask me.

Speaker B: I don’t think it’s a shenanigan at all.

Speaker B: I think this is exactly what really macro prudential bank regulator should do.

Speaker B: Banking, by its nature, is a public service.

Speaker B: It always shakes hands with the government.

Speaker B: The whole reason why people feel safe having their money on deposit at a bank is because they don’t need to worry about, like, is my bank credit worthy?

Speaker B: And that kind of thing.

Speaker B: And it is important for banks to be able to lend through a cycle.


Speaker B: It is important for banks to be able to make long term loans to do this thing called maturity transformation.

Speaker B: That is the job of a bank to borrow short and lend long to take in these deposits, which are callable overnight and then go out and lend them into the business world.


Speaker B: It is natural for interest rates to go up and down over the course of that cycle.

Speaker B: And it doesn’t make sense for banks to be forced to mark all of those assets, their loans to market, according to what interest rates do when they’re holding them to maturity and when it is their job to make.


Speaker B: Long term loans and when they are going to support their clients through the cycle and get paid back when the maturity of the loan comes due.

Speaker B: Now, in this case, it was a little bit different because it wasn’t really bank loans, they were just buying mortgage backed bonds.

Speaker B: But in principle, it’s the same thing.

Speaker B: And it is the job of the Fed to shore up the banking system.

Speaker B: And I wrote about this in my newsletter today.

Speaker B: What banks do is they lend money and support a whole bunch of non enormous businesses.

Speaker B: If you are one of the 15% of Americans who works for a big S and P 500 publicly listed company, then sure, your company can get by with capital markets and investment banks and bonds and stuff like that.

Speaker B: But for everyone else, which is like 85% of employees, those are companies who really require good old fashioned banking relationships.

Speaker B: And the Fed needs to be able to support those banks.

Speaker B: And I think they did exactly the right thing.

Speaker A: And a lot of banks took advantage of this on Thursday this week.

Speaker A: So a week after everything kind of fell apart, we learned that the Fed lent $153,000,000,000 to banks since opening that emergency window, which is a record, I believe.


Speaker A: Yeah, way past the peak in the financial crisis, although I’m not sure that number is adjusted for inflation.

Speaker A: But basically what it shows is that banks took advantage and there was a need for the Fed, I think, to do this.

Speaker B: And I think this is also really good as well.

Speaker B: The Fed has this discount window, right?

Speaker B: The whole point of any central bank is that it has to act as a lender of last resort.

Speaker B: On Sunday night, the Fed came out and said, we are really leaning into this lender of last resort thing.

Speaker B: We’re going to reduce the haircut that you need to take when you post collateral to us.

Speaker B: We’re going to value the collateral at a very generous valuation and we’re really encouraging you to come and use this discount window.

Speaker B: And one of the problems was that back in 2008, banks are very reluctant to take advantage of that for reasons that no one entirely understood, and that caused real problems.

Speaker B: The good news right now is the banks are not reluctant to go borrow from the discount window.

Speaker B: They are doing that.

Speaker B: And the stigma, such as it was that was associated with the discount window does seem to have gone away.

Speaker B: And thank Rest, because this is no time to worry about discount window stigmas.

Speaker A: Okay, but so the Fed announces that clearly banks took advantage.

Speaker A: And for a second, there was sort of like a pause in the crisis mode that the media and the market seemed to be showing us.

Speaker A: There was a little pause, and then, no, it wasn’t over yet.


Speaker A: It wasn’t over yet, right?

Speaker A: I mean, things still weren’t feeling right yet.

Speaker A: So then the next shoe to drop, I guess, bank stocks were still falling.

Speaker A: And then Credit Suisse comes into the picture.

Speaker A: I mean, this has all happened in one week.

Speaker A: It’s so wild to me.

Speaker B: Yeah.

Speaker B: The fact that Credit Suisse decided to pick, like, this week to implode was just incredibly unhelpful of it.

Speaker B: Credit Suisse has been slowly imploding for the past 15 years.

Speaker B: They could have waited another few months.

Speaker B: Seriously, guys.

Speaker A: So that kind of happens in the middle of all this.

Speaker A: And then the Swiss say, don’t worry, we’ll loan Credit Suisse some money.

Speaker A: So everyone’s like, Hugh, okay, so Credit Suisse is fine.

Speaker A: It’s not too big to fail.

Speaker B: Credit Suisse is not fine.

Speaker A: But then after that, I think the next day, there’s an announcement.

Speaker A: First Republic, another regional bank in the US.

Speaker A: Is kind of stumbling, and somehow Janet Yellen got the biggest banks in the country to agree to deposit $30 billion there to shore up those banks.

Speaker A: It’s kind of important to note here too, that First Republic is also a favored bank for early stage tech startups, probably one of the banks behind Svb people use a lot.

Speaker A: So it’s very similar to Svb.

Speaker B: Yeah.

Speaker B: And First Republic, while it doesn’t have quite as many uninsured deposits as SCB, suddenly has a lot.

Speaker B: And First Republic, while it doesn’t have quite as much of a bad assets problem, definitely has a bad assets problem.


Speaker B: And First Republic is facing the same kind of solvency issues that SCB was, to the point at which it actually did get downgraded to junk this week, which is not something any bank particularly wants.

Speaker B: And it’s very difficult for a major bank like First Republic to operate indefinitely with a junk credit rating.

Speaker B: In the short term, it’s fine because it has access to that Fed discount window and all the rest of it.

Speaker B: But what was interesting to me was that there was this really interesting sort of gathering round of all the big banks in America.

Speaker B: Wells fargo, JPMorgan, goldman sachs, morgan stanley.

Speaker B: You name them.

Speaker B: They all came along and said, we’re going to come up with $30 billion and just put it on deposit at First Republic as a vote of confidence in First Republic that this is uninsured deposits.

Speaker B: And we’re just going to buy.

Speaker B: We’re just going to put our money on deposit with First Republic because we think the First Republic is a bank that the system needs.

Speaker B: And we will do whatever it takes to make sure that it can withstand this mini banking crisis that we’re going through.

Speaker B: And it was this weird and almost heartening moment of solidarity in the banking industry, which is often extremely competitive.

Speaker A: Well, I think it was cooperation and self interest because I think everyone was terrified that this was going to spiral out of control into a contagion that affected every piece of the banking system, regardless of what the depositor base has looked like.

Speaker B: Yeah, I mean, the fact is that the banks we’re worried about here are the regional banks like First Republic and Signature Bank, which also failed on Sunday night, by the way.


Speaker B: It’s not the big too big to fail banks, right?

Speaker B: So there are a few what’s known as GSIBs Global Systemically Important banks.

Speaker B: So that would include JPMorgan, bank of America, Wells Fargo, Citibank, Morgan Stanley, Goldman Sachs, bank of New York Mellon.

Speaker B: Those are the banks who have seen massive deposit inflows this week because they’re too big to fail.

Speaker B: Everyone knows that.

Speaker B: There’s no way that any depositors are going to lose money leaving money on deposit with JPMorgan.

Speaker B: And it was those banks, the ones who no one is worried about failing, who kind of rescued First Republic.

Speaker B: But you are right that just as an industry, it’s in everybody’s best interest for the banking industry not to have a massive rolling crisis.

Speaker B: We looked like we’d pretty much smoothed the waters on Sunday night.

Speaker B: First Republic wasn’t taken over on Tuesday morning.

Speaker B: It looks like there wasn’t a massive bank run after the wires went out on Monday that had already been scheduled.

Speaker B: But then we had some other bad news, some of it from Switzerland.

Speaker B: Certainly that credit rating downgrade didn’t help.

Speaker B: And one of the other things that is probably unhelpful is that most of these regional banks and First Republic is definitely one of them.

Speaker B: Silicon Valley Bank as well.

Speaker B: And Signature Bank and Silvergate Bank.

Speaker B: They were all public.

Speaker B: They were publicly listed stocks.

Speaker B: And in the absence of any actual information about what’s happening to their deposits, people just start looking at the stock price.


Speaker B: And banking right now doesn’t look very attractive for these regional banks because this emergency credit that they’re accessing from the Fed is not cheap.

Speaker B: Their solvency issues, which we talked about in Slate Plus last week and we’ve mentioned a little bit this week, are not great.

Speaker B: And it’s kind of a natural time for bank stocks to be low right now.

Speaker B: And when bank stocks are low and banks are inherently incredibly leveraged, that’s what fractional reserve banking is.

Speaker B: What that means is that you can get these kind of terrifying, oh my God, such and such a bank is down 40% today.

Speaker B: And then people think that’s really bad and that alone just the stock price can cause a bank run.

Speaker B: And that is like a really unfortunate sort of death spiral mechanism.

Speaker B: And I kind of wish that a lot of these banks weren’t public right now for exactly that reason.

Speaker A: Felix, one thing you said that I’ve been thinking about a lot that I hope we could unpack, maybe, is that too big to fail banks?

Speaker A: I mean, they come out of this looking really good and they saw, you know, more money flowing to them and they stepped in to even save another bank.

Speaker A: Very like 1907 J.

Speaker A: P.

Speaker A: Morgan vibes there, because he famously the banker back then, got other banks into a room and forced them to save to do a bank rescue.

Speaker A: Anyway, it seems like too big to fail is good now, right?

Speaker B: I know, doesn’t it?

Speaker B: Yeah.

Speaker A: Am I missing something?


Speaker A: But it’s not supposed to be.

Speaker A: I’m really flummoxed by this because in the US, it seemed like it was a kind of good thing.

Speaker A: Like everyone was like, well, at least the big banks are safe because they’re too big to fail and that’s great.

Speaker A: And everyone put their money there or whatever.

Speaker A: Then overseas at the same time, you see the Swiss bank, Credit Suisse, which has just been like mired in controversy and scandal and is obviously not well managed or hasn’t been well managed, get rescued by the Swiss government and you’re like, wait, that’s why we don’t like too big to fail.

Speaker A: So I don’t know how to think about too big to fail anymore.

Speaker B: Right.

Speaker B: So the way to think about too big to fail is that some banks really are too big to fail.

Speaker B: There are 30 of them.

Speaker B: You can look up the list, it’s on the internet.

Speaker B: And when you have that designation, when you have that official GSIB designation, you have to operate under very, very strict, ultra enhanced scrutiny of bank regulators, both domestically and internationally, for precisely the reason that you are too big to fail.

Speaker B: No one can allow you to fail.

Speaker B: Like, it is literally impossible for Credit Suisse to just fail.

Speaker B: So when push comes to Sherv, the Swiss National bank had no choice but to lend it another 50 billion Swiss ranks because it’s too big to fail.

Speaker B: And everyone knew that was going to happen.

Speaker B: Now, what happens to the stock price?


Speaker B: We don’t know.

Speaker B: What happens to the cocos, which I don’t know, we’ve talked about on the show before, the contingent, convertible debt, that kind of stuff, we don’t know.

Speaker B: But the bank itself has to go on because it is just too big and just too interconnected to fail.

Speaker B: And therefore it has to operate under this very sort of strict scrutiny from its regulators, just as the big banks in the US have to operate under strict scrutiny from their regulators.

Speaker B: We are now living in this post 2008 era of what’s known as like basel three and macro prudential, blah, blah, blah, which basically means that the kind of crazy leverage that those too big to fail banks had back in 2006, 2007, no one’s allowed to do that anymore.

Speaker A: Well, one question is, was svb or First Republic?

Speaker A: Should they have been too big to fail too?

Speaker A: Because clearly the Fed said they pose a systemic risk.

Speaker A: So why weren’t they also designated in that way is sort of a question.

Speaker B: Well, they were small enough to fail and Silicon Valley Bank did fail.

Speaker B: That’s the difference, right?

Speaker B: Silicon Valley Bank, Quay Bank was not bailed out, but Silicon Valley Bank failed.

Speaker B: All of its shareholders were wiped out.

Speaker B: All of its executives were fired.

Speaker B: All of its bondholders were pretty much wiped out.

Speaker B: We, as of this taping, don’t know whether it’s going to survive.

Speaker B: We assume that bits and pieces will get sold to someone or other.

Speaker B: But yeah, it’s a failed bank, just like Washington Mutual was a failed bank.


Speaker B: You’re allowed those banks are small enough to fail.

Speaker A: Well, then it doesn’t just to go back to too big to fail being quote, unquote, good.

Speaker A: Now, it doesn’t seem that good to me.

Speaker A: If like J.

Speaker A: P.

Speaker A: Morgan and Chase has, like Jamie Dimon is making millions and millions and millions of dollars and his company is basically backed by the US government, it’s like Quasinationalized, is it not?

Speaker B: Yes, it is.

Speaker B: And this is totally understood.

Speaker B: And they have to pay an extra fee basically to the government in order to make up for that.

Speaker B: And it is understood that the provision of credit is a fundamental part of what drives any economy, right?

Speaker B: Banks create money.

Speaker B: If you want to start going into the really boring mechanisms of how money growth happens and that kind of stuff.

Speaker B: Without banks, the economy doesn’t work and certain banks are too big to fail.

Speaker B: And it just like it is possible to imagine some incredibly egalitarian banking system where there are a thousand banks and all of them are small enough to fail and there aren’t any which are too big to fail.

Speaker B: Right?

Speaker B: Like, in principle that might be possible.

Speaker B: Like, remember the slogan back in the financial crisis that used to hear every so often of break up the banks, right?

Speaker B: They’re too big.

Speaker B: But the fact is that even if you did break them up into any sensible kind of constituent parts, you shave off the investment bank from the commercial bank, you shave off this bit from that bit.


Speaker B: Even then the commercial bank heart of it remains too big to fail.

Speaker B: Right.

Speaker B: There’s no country in the world that has a lot of small enough to fail bank.

Speaker B: There’s no country in the world that has a lot of small enough to fail banks and no, too big to fail banks.

Speaker B: It just doesn’t exist in the wild.

Speaker B: In an ideal world, perhaps we can think that that would be great, but I’ve never seen it anywhere.

Speaker A: Yeah, this also kind of essentially illustrates the increasingly public nature of the banking sector.

Speaker A: It’s completely dependent on government guarantees and government charter.

Speaker A: Talk about it like it’s entirely private.

Speaker B: It’s totally not entirely private.

Speaker B: Right.

Speaker B: I don’t know if you’ve noticed this, right, but whenever there’s a bank ad on Slate money, we always say at the end, member FDIC.

Speaker B: Right.

Speaker B: It’s actually like something you have to do if you’re advertising yourself as a bank or if you’re presenting yourself as a bank, is to tell everyone, like, we are working with the government here.

Speaker B: The FDIC is the government.

Speaker B: This is a partnership with the government.

Speaker B: And the reason you can feel safe depositing your money with us is precisely because the government is guaranteeing your money.

Speaker B: Banks everywhere, by necessity, are always a public utility and they always are regulated by the government and are quasi public, as you put it in that way.

Speaker B: There is nothing new in here, and in fact, it has to be that way.


Speaker B: So sure.

Speaker B: Let’s take a break and we have some questions.

Speaker B: You guys have been amazing at asking us questions via email, so let’s maybe answer some of those after the break.

Speaker B: Okay, so let’s answer some questions.

Speaker B: Marcus wrote in and said, I was wondering about the ownership of Svb.

Speaker B: Now I understand the government has backstopped deposits.

Speaker B: Is Svb now owned by the government?

Speaker B: And what does that really mean?

Speaker B: Short answer is yes.

Speaker B: We have nationalized SCB.

Speaker B: It is now.

Speaker B: Elizabeth, what did you say it was called?

Speaker B: Silicon Valley bridge bank.

Speaker A: That’s technical.

Speaker A: Silicon Valley bridge bank.

Speaker B: The idea being that this is like a bridge bank that won’t last very long and eventually is going to get sold to someone else.

Speaker B: And then when it’s sold to, let’s say it’s sold to, I don’t know, Barclays, then it will just become part of Barclays and it won’t exist anymore.

Speaker B: It’ll just be Barclays at that point.

Speaker B: But for the time being, we have a US government owned bank called Silicon Valley Bridge Bank.

Speaker B: There’s also another US government owned bank in New York which is running what used to be Signature Bank.

Speaker B: And this is what happens when banks fail, is the FDIC comes in and basically nationalizes them.

Speaker B: This is good, right?

Speaker A: Yeah.

Speaker A: In the case of Silicon Valley Bridge Bank, the government’s basically guaranteeing all deposits for a year, and I think they’re assuming that they’ll be able to find a buyer sometime during that period.


Speaker A: I was remembering when I was growing up, I guess that was back during the time I wouldn’t know this because I was too young, but it was during the time of the savings and loan crisis and like hundreds and hundreds of banks failed.

Speaker A: And I remember going to the bank and the FDIC or whoever, I don’t know, had taken over and there was like a new sign taped up over the old sign of whatever the bank used to be called.

Speaker A: It used to be pretty common, but it hasn’t been post crisis to see a bank fail and get taken over.

Speaker A: So I think people may have forgotten kind of how it works and how the FDIC knows what it’s doing.

Speaker B: Marcus continues and says, why would the government have to take it over if the deposits are backstopped?

Speaker B: Couldn’t the bank just use this new Fed program to borrow all the money it needs to pay the outflow of deposits?

Speaker B: Another good question.

Speaker B: It is one of those cases, and you see this quite a lot in finance, where you solve the problem going forwards for every other bank.

Speaker B: So if you’re First Republic or if you’re Pac West, you get to take advantage of this program.

Speaker B: But if you’re the bank that caused the problem in the first place, then no.

Speaker B: So you don’t get that special treatment, you just get intervened and taken over.

Speaker B: Barney Frank was on the board of Signature Bank and this was one of the things he said he’s like, if you’re going to announce this incredible Fed window, then Signature Bank wouldn’t need to fail.


Speaker B: Right.

Speaker B: We could just borrow everything we needed from the Fed.

Speaker B: And he’s not wrong.

Speaker B: But the regulators have made it clear that they kind of didn’t like Signature Bank, partly because it was very involved in crypto, partly because there were other controls that they thought were missing and they just didn’t feel like they trusted Signature Bank enough to allow it that privilege of accessing this extraordinary Fed window.

Speaker B: So they just took it over instead.

Speaker A: Are we going to do a whole sidebar about Barney Frank?

Speaker B: Sure.

Speaker B: What do you want to say about Barney Frank?

Speaker A: Well, I would like to say that Barney Frank is the Frank in DoddFrank, the much hated financial regulation bill that made too big to fail official.

Speaker A: And anyway, it’s a get tough on banks kind of a bill, as people probably know, and Barney Frank’s name is on it.

Speaker A: What people didn’t really realize is that after he retired from the Senate, he wound up on the board of this bank, Signature Bank, which got a lot of its deposits from the crypto industry.

Speaker A: And back in 2018, when Trump was in office and they wanted to roll back some of DoddFrank, barney Frank went back to Congress and said, this will be fine.

Speaker A: And he was also on the board of a bank when he said it.

Speaker A: And it’s just sort of interesting what happens to legislators after they leave Congress.

Speaker A: That is the side note about Barney Frank.

Speaker A: Yeah, there was an interview with him, with New York Magazine, I think, and he was complaining about the takeover because he says the DFS New York’s Regulatory Authority didn’t actually say that Signature was insolvent.


Speaker A: And he also argues that they didn’t have that many crypto depositors, but that seems disingenuous when crypto was 30% of their deposit base.

Speaker A: So even if it was two or three, what does it matter?

Speaker A: What do you think about the insolvency argument?

Speaker B: I don’t think it matters.

Speaker B: Right.

Speaker B: One of the important parts of what we’re talking about with this very close relationship between banks and regulators that is necessary in a world of government deposit insurance is that the regulators don’t have a very strict set of criteria that all needs to get ticked off before they intervene and take over a bank.

Speaker B: They can do it with any bank for any reason.

Speaker B: And with Signature, they were just like, okay, this is too much for whatever reason.

Speaker B: And they haven’t spelled out their reasons, and they don’t need to spell out their reasons, but they have made it clear that in this auction for Signature Bank, they’re now running and they’re trying to find someone to buy it.

Speaker B: They fully expect the new buyer of Signature Bank to not bank any of those crypto companies.

Speaker B: The crypto accounts are just basically not included in the auction.

Speaker A: Yeah.

Speaker A: The other industry that I think they have a lot of heavy concentration in is commercial real estate, particularly in New York.

Speaker A: My ex boss, Jared Kushner, I think had accounts there.

Speaker B: Interestingly.

Speaker B: There is one other industry where they’re very big.

Speaker B: They’re by far the biggest banker to Broadway.

Speaker B: So if you want Broadway shows to keep on going strong, we have to hope that Signature Bank finds a sympathetic buyer who understands how Broadway works.


Speaker B: It’s one of those things where there are certain industries where just bankers really understand that industry.

Speaker B: And just so happens that Signature really understands Broadway.

Speaker B: It also, by the way, lost a whole bunch of money lending money, lending money against taxi medallions in New York City.

Speaker B: That’s another weird business that it got into.

Speaker B: That it probably shouldn’t have got into.

Speaker A: What’s the next question?

Speaker B: Felix Marcus had one last bit.

Speaker B: He said, Is there a limit to how many banks the government would take ownership of?

Speaker B: Would the government do this for a larger bank if conditions became worse?

Speaker B: No.

Speaker B: And yes.

Speaker B: As we saw in Savings and Loan, there is no limit.

Speaker B: And one of the reasons why the FDIC did or what it did what it did and the full extent of deposits were guaranteed, not just the insured deposits but also the uninsured deposits, is precisely that it would be more expensive for the FDIC to only insure insured deposits up to 250,000 than it is to do what they did.

Speaker B: If they made it clear with Signature Bank and with Silicon Valley Bank that beyond $250,000, you are on your own.

Speaker B: That would cause a huge bank run at thousands of bank run, thousands of banks across the entire country.

Speaker B: Thousands, hundreds of banks.

Speaker B: Like at least a couple of hundred banks would end up failing.

Speaker B: And that would be more expensive for the FDIC than just insuring everything at Svb.

Speaker B: So if you want the details on that, you can look up Friday’s Axios Markets, where I went into detail about that.


Speaker A: Now we’re in this weird world where everyone kind of woke up to the fact that deposits over $250,000 are not insured.

Speaker A: And there’s sort of like a new worry.

Speaker A: About those deposits, which is leading some people to or some companies maybe or some money to flee from the smaller banks to the bigger banks where it’s still true that money over $250,000 or more wouldn’t be insured, but they’re too big to fail.

Speaker A: So maybe it’s safer to put your uninsured deposits there, thus feeding kind of some kind of like doom loop cycle for the smaller banks.

Speaker A: What do you think of that?

Speaker B: So there’s a couple of things going on that’s definitely happening, but also right now there’s no good reason for anybody to have more than $250,000 on deposit.

Speaker B: The deposit rates are not particularly attractive.

Speaker B: Right.

Speaker B: You can keep your money in, like, treasury bills which are just as liquid as the deposit account and you can earn 5% on that.

Speaker B: There are also things called ICS Cash sweeps.

Speaker B: There’s a company called Infra Infrifi, which used to be called Promontory that will allow you to insure millions and millions of dollars rather than just $250,000.

Speaker B: They do clever things where they splice up the deposits and put it in a bunch of different banks and you just deal with one bank.

Speaker B: There’s a lot of ways to keep millions of dollars insured or safe.

Speaker B: And what kind of befuddles me, I have to admit, is why so many companies had so much cash, have so much cash just sitting on deposit with banks.


Speaker B: Silicon Valley Bank was a kind of outlier on this that you had these startups and these venture capital companies just having millions of dollars in the bank because they were Silicon Valley and that’s what they do.

Speaker B: But even through the rest of the country, roughly 50% of deposits that basically every bank in the country are uninsured.

Speaker B: And it always kind of befuddles me why anyone would have any uninsured deposits, especially when treasury bills are yielding so much.

Speaker A: I mean, I don’t think anyone realized maybe this is wrong, but didn’t seem like people realized the risk at play with the uninsured deposits.

Speaker A: There was like a feeling of safety.

Speaker B: Yeah.

Speaker B: And we did you know, there was this one of the problems and honestly, this was kind of the biggest problem with Silicon Valley Bank.

Speaker B: And the reason why it caused more of a crisis than really it should have done is that it failed on a Friday mid morning rather than failing on a Friday afternoon, which is when banks normally fail.

Speaker B: The way the FDIC normally works is it comes in on a Friday afternoon after the bank closes.

Speaker B: They wrap everything up and by Monday morning it’s reopened under a new brand, under a new shingle, under new ownership.

Speaker B: The shareholders are wiped out, the management has been replaced, but no one spends a weekend panicking about whether they’re going to be able to make payroll.

Speaker B: What happened here was that you had the intervention by the FDIC on Friday morning and then for all of Friday and all of Saturday and nearly all of Sunday.


Speaker B: You had a whole bunch of people going, oh my God, oh my God, what if I can’t make payroll?

Speaker B: Oh my God, I’ve just lost all my money.

Speaker B: Oh my God.

Speaker B: I’m panicking.

Speaker B: And that panic started spreading beyond just Silicon Valley bank to everyone who had more than $250,000 in their bank account.

Speaker B: In the end, it was fine.

Speaker B: The government stepped in and said, listen, you’re fine.

Speaker B: You’re completely insured.

Speaker B: Even if you have over $250,000 in Svb or signature, they’ve sent as strong of a signal as they possibly could that if you’re also at First Republic or Pac West, then you also don’t need to worry.

Speaker B: And they had to do that because of all of that panic.

Speaker B: If they’d only been able to wait until Friday afternoon to close down Svb, then it probably would have been almost much less panic, I would say.

Speaker A: Next question.

Speaker B: Next question from Damien.

Speaker B: Basically, what should Svb have done with the asset side of its portfolio?

Speaker B: They bought all of these mortgage backed bonds, and the bonds went down in value, and they became insolvent.

Speaker B: And then there was a bank run, so that was bad.

Speaker B: What should they have done?

Speaker B: Basically, the answer there is manage your interest rate risk.

Speaker B: Like the San Francisco Go, fed should have been much more on top of it.

Speaker B: That was their main bank regulator, and they should have been much more on top of it, and they weren’t.


Speaker B: And certainly a Silicon Valley bank should have been much more on top of it, and they weren’t.

Speaker B: They went eight months without a chief risk officer.

Speaker B: That’s like a really bad look.

Speaker B: It was known within the bank that they were taking a bunch of interest rate risk, and this was very risky.

Speaker B: And so it was known within their regulator that this was very risky and somehow they managed to keep on doing it, and they were allowed to keep on doing it.

Speaker B: And that was a regulatory failing, and that was a management failing.

Speaker B: And they should not have taken that risk.

Speaker B: And it is not necessary to take that kind of risk.

Speaker B: You can make floating rate loans instead of fixed rate loans.

Speaker B: You can do interest rate swaps.

Speaker B: You can do lots of things.

Speaker B: You can just put your money on deposit at the Federal Reserve.

Speaker B: The Federal Reserve will pay what’s known as interest on excess reserves.

Speaker B: I oer.

Speaker B: There are lots of things you can do with your assets which don’t involve buying long duration mortgage bonds.

Speaker B: Come on, people.

Speaker A: Yeah.

Speaker A: When the bank failed, it had reported that it was in the process of restructuring its portfolio for shorter term instruments and hedging with swaps.

Speaker A: It sort of raises the question of why they didn’t do it sooner.

Speaker B: Yeah, the reason they didn’t do it sooner was they got a little bit greedy, but yeah, no, it was a terrible, terrible move.

Speaker B: And we have a question from PT Whittington saying the FDIC will make up any losses to the insurance fund essentially by levying an assessment on all banks.


Speaker B: So I wonder if that will make all banks a little more circumspect about the pursuit of profit at the risk of their depositors.

Speaker B: No, I think is the answer.

Speaker B: I don’t think that banks think that way.

Speaker B: And as I say, if you look at what the FDIC did, they basically prevented a bank run.

Speaker B: They prevented losses to the insurance fund by saying everything is insured.

Speaker B: It’s a bit what’s the word?

Speaker B: Paradoxical.

Speaker B: But the more they insure, the less they need to pay out in insurance.

Speaker B: Because if your deposits are fully insured, then you don’t need to withdraw them.

Speaker B: And if you’re not withdrawing them, if you’re just keeping them on the bank, at the bank, then the FDIC doesn’t need to pay anything out.

Speaker B: Emily, you got another question via text message about central banking.

Speaker A: Yes, it’s a really good question.

Speaker A: I think as a Slate Money listener, I would like to hear whether the Fed moves this week could be construed as quantitative easing and how that is likely to impact its mandate to bring down inflation and restore price stability.

Speaker A: In other words, what the heck?

Speaker A: The Fed is now lending out all this money to banks at a time when it’s supposed to be not doing that, when it’s supposed to be taking money out of the system, it’s supposed to be bringing down inflation.

Speaker A: And our colleague Neil Irwin, I believe, has a piece out about this on Friday as well.

Speaker A: But I’m curious what you think.


Speaker A: What do you guys think?

Speaker A: I think not yet.

Speaker A: I don’t think that this week’s activity has been large enough or aggressive enough to constitute QE.

Speaker B: Again, I would say quite the opposite.

Speaker B: I’d say that we’ve actually had tightening that what the Fed tries to do when it raises interest rates is make people more reluctant to borrow money and make banks more reluctant to lend money.

Speaker B: Because if they lend money out, they’re going to have to do it at a higher interest rate, which is going to be harder to repay, and they’re going to have bigger credit losses and they try and sort of take the economy off the burner, as it were, like try and get things to cool down a bit.

Speaker B: What the banking industry as a whole just did is basically tighten credit conditions.

Speaker B: Banks are in no mood to be lending out money right now.

Speaker B: Borrowers are in no mood to be borrowing money right now.

Speaker B: We just have much less credit now than we did a week ago.

Speaker B: We have much less appetite for credit on the demand side.

Speaker B: We have much less appetite for credit on the supply side.

Speaker B: And for those reasons, the Fed kind of doesn’t need to hike as much as it had thought, perhaps because this banking crisis has had the effect of probably a 25 50 point basis point hike right there.

Speaker B: That’s that’s my theory that yeah, far from this being QE, this is like QT.

Speaker B: This is tightening that we’re seeing.

Speaker A: Yeah.


Speaker A: The Goldman had a similar note that what the banking crisis means is that the Fed has to do less rate hiking now because there’ll be a natural pullback in lending and I guess spending because of what happened, which is really interesting, which would kind of offset whatever money the Fed lent out.

Speaker A: Right.

Speaker A: Because lending out money isn’t the same thing as quantitative easing, buying bonds.

Speaker A: It’s different.

Speaker A: Yes.

Speaker B: Yeah.

Speaker B: And exactly.

Speaker B: And the Fed remember that the Fed is only lending it to banks.

Speaker B: Right.

Speaker B: If you lend that money to a bank that and $2.75 will get you on the subway.

Speaker B: Right.

Speaker B: That doesn’t actually affect the real economy.

Speaker B: In order for that to have any effect on the real economy, the banks then need to turn around and releend that money out to individuals and businesses.

Speaker B: And that’s the big question.

Speaker B: And I don’t see any indication that’s happening.

Speaker A: I mean, up until this past week, all the economists, everyone watching the Fed had been saying, like, those guys are going to break something, they’re raising rates too fast, something’s going to break.

Speaker A: And like the Elizabeth Warrens of the world were saying, people are going to be unemployed, all the people are going to be thrown out, they’re going to lose their jobs.

Speaker A: But that hadn’t really been happening except in the tech industry.

Speaker A: And then now we see what broke, which was the banking industry.

Speaker A: And that might have the same impact as raising unemployment would on inflation, right?


Speaker B: No, I think that’s absolutely right.

Speaker B: Okay, I think that’s your questions answered.

Speaker B: Let’s talk a little bit more about central banks and monetary policy after this break.

Speaker B: There is another super interesting question about central banks related to this crisis, Emily, which you wrote about this week, which is that the Federal Reserve is not only in charge of monetary policy, it’s also the top main bank regulator in America and specifically for Silicon Valley Bank.

Speaker B: The Federal Reserve Bank of San Francisco was the main regulator of Svb.

Speaker B: And that feels like a weird kind of tension.

Speaker B: In fact, the CEO of Silicon Valley Bank, Greg Becker, was on the board of the San Francisco Fed when it comes to things like the San Francisco Fed needs to know about the innovation economy in Silicon Valley and no one knows that better than the CEO of Silicon Valley Bank.

Speaker B: That makes sense, but it also creates this insane conflict where he’s on the board of his own regulator.

Speaker A: Yeah, I mean, the Fed is not looking good coming out of this and I’m not the only one saying it by a long shot.

Speaker A: So the immediate criticism is Silicon Valley Bank had regulators sitting at the San Francisco Fed, bank examiners who are supposed to keep an eye on what it’s doing and be like, hey guys, hey, guys, interest rates, they’re going up.

Speaker A: Look at all this stuff on your balance sheet.

Speaker A: This is bad.

Speaker A: This is bad.

Speaker A: You got to fix this.

Speaker A: That should have been going on behind the scenes.


Speaker A: There’s a story out in Bloomberg last week that suggested it was going on, but even if it was going on, nothing really changed.

Speaker A: And then there’s this other kind of controversy brewing because the guy at the main Federal Reserve named Randall Quarrels got a lot of attention during the Trump years for saying he wanted to take a new approach when it came to bank examination.

Speaker A: He was criticized for being taking a friendly approach to bank examination, some would say a more lax approach, et cetera.

Speaker A: He would say no.

Speaker A: He told me he was just trying to establish a due process so bank examiners would the way they work with the banks made more sense and there was due process and fairness involved.

Speaker A: But that really hasn’t stemmed the criticism.

Speaker A: So it’s not only the San Francisco Fed that’s being criticized, it’s also the Fed Fed, because while they’re not doing the actual examining of the bank, they’re sort of setting the policies and telling the regionals how to do the examining.

Speaker A: If that makes sense.

Speaker A: They set the tone.

Speaker B: I will say it could be worse, right?

Speaker B: It could be the Swiss National Bank trying to regulate Credit Suisse.

Speaker B: And if there’s been a massive regulatory failure anywhere, it has to be that one because Credit Suisse, as we talked about, is too big to fail.

Speaker B: It’s a GSIB in America at least we haven’t had any GSIBs run into trouble.

Speaker B: Credit Suisse is just this bottomless pit of scandals and bribery and money laundering and tax evasion and Greensill and Arcagos and you name it.


Speaker B: Whatever illegal activity you can think that a bank might have ever done.

Speaker B: Credit Suisse has been found guilty of and has been fined for.

Speaker B: And now they just came out and said, oh, and by the way, our last two years of accounts have material misstatements in them and we don’t actually know how much money we made or lost in 2021 or 2022.

Speaker B: You’re like, come on, people.

Speaker B: When you are that big, when you are that systemically important, you have to have your act together.

Speaker B: And it is really the Swiss central bank’s job to ensure that Credit Suisse has its act together.

Speaker B: And they have clearly failed.

Speaker A: I mean, is there a mechanism I mean, I understand on some level too big to fail, but there has to be a mechanism to be like, okay, we’re calling it.

Speaker A: You failed.

Speaker A: This is bad.

Speaker A: We need to start over.

Speaker A: Like, can’t the Swiss do something?

Speaker A: It seems like Credit Suisse has run out of chances.

Speaker A: And what happens in the US.

Speaker A: If some similar kind of crisis royals, J.

Speaker A: P.

Speaker A: Morgan Chase or Goldman or whatever, can the regulators come in and be like, look, I know I said you were too big to fail, but you should probably go out of business.

Speaker A: I think in theory, that the too big to fail banks here, though, it would be an incremental process where they get fined and their penalties all the way up to that.

Speaker A: So it seems unlikely that it would get that bad.


Speaker A: Right?

Speaker A: Yeah.

Speaker B: Well, I mean, the one that we talked about last week, right, was Wells Fargo.

Speaker B: Wells Fargo is a GSB.

Speaker B: Wells Fargo has a long series of management failures and oversights and criminal behavior, and it is operating under a consent decree right now.

Speaker B: It’s not allowed to increase its deposit base.

Speaker B: It’s operating under the strict deposit cap.

Speaker B: And, yeah, the Federal Reserve and the other regulators are taking a very close interest in Wells Fargo and basically saying you can’t so much as go to the bathroom without asking us for permission first.

Speaker B: And that’s kind of what you want to see, right?

Speaker B: I mean, should they have been taken over?

Speaker B: Should they have been veiled?

Speaker B: Should the shareholders have been zeroed out?

Speaker B: Should the management have been fired?

Speaker B: Well, the fact is that virtually every single member of senior management who oversaw that fake account scandal was pushed out.

Speaker B: And who were they pushed out by?

Speaker B: Not the board.

Speaker B: It was by the fed.

Speaker A: Right.

Speaker A: And one of them now is Carrie Tolstead, I believe is facing possible prison sentence, which would be and she just.

Speaker B: Got fined $19 million, I think, which is, even by Wall Street standards, $19 million is a pretty big amount of money.

Speaker B: I think we should have a numbers round.

Speaker B: There have been a lot of numbers this week, but, Elizabeth, you have one.

Speaker A: So my number is 50.

Speaker A: And that’s the number of bank accounts.


Speaker A: An NBA superstar whose nickname is the Greek freak his name is Janice Attentekupa opened 50 bank accounts with each one holding $250,000 exactly because of the FDIC deposit limit.

Speaker A: And this is an old story, but it’s from last year.

Speaker B: Someone tell him about infrifi.

Speaker B: Really, you can do this thing called ICS cash sweep.

Speaker B: The solution to the problem of there is only $250,000 in federal guarantee per bank account is not to open 50 bank accounts in 50 different banks.

Speaker B: People, that is the wrong answer to that problem.

Speaker A: I think this guy was discarded from living in the Greek economy for so long and then came here and said, this seems safe.

Speaker A: I’ll do this good problem to have, if you ask me.

Speaker B: My number is five, which is the number of years ago that Joseph Di Paolo, the CEO of Signature Bank, said this.

Speaker B: So this is five years ago.

Speaker B: He said in five years, a number of banks will not be around because of blockchain technology.

Speaker B: He totally nailed it.

Speaker B: This is like such an oracle.

Speaker B: At Delphi moment, he called his own.

Speaker A: Death without realizing his bank’s not around.

Speaker B: Exactly.

Speaker A: To be clear, his bank is not around because of blockchain technology.

Speaker B: Yeah.

Speaker A: Do you want to know my number?

Speaker B: Yeah.

Speaker A: My number is 64.

Speaker A: I don’t know if you guys have been paying attention to what’s going on in France, but 64 is now the new retirement age there and it comes after the French President Emmanuel Macron forced through raising the retirement age from 62 to 64, causing all manner of protest and strikes and just people just raging over this change.


Speaker A: He tried to get a vote for it in French parliament.

Speaker A: He wasn’t going to have a vote.

Speaker A: And there’s a mechanism apparently in the French constitution where you can force through measures.

Speaker A: He basically put his whole administration on the line so he could raise the retirement age in France again from 62 to 64, which I’m just fascinated by because I’m an American and I believe that I will never retire.

Speaker A: Although of course you can take Social Security starting at 62.

Speaker A: But anyway, I don’t know how you guys if you guys have been following it or have feelings, but it’s just the most French thing to me ever.

Speaker B: No, it is gloriously French, right?

Speaker B: Like going out on the street and protesting because you want to retire at 62 and now the French government won’t let you retire until you’re 64.

Speaker B: I love European strikes in general and French strikes in particular, but this is a wonderful thing to strike over and Americans would never strike over this, right?

Speaker B: Americans would never protest.

Speaker A: No, never.

Speaker B: Because in America everyone feels like it’s good and noble to work in France.

Speaker B: Clearly they’re like it’s good and noble to retire as early as possible.

Speaker B: And I kind of like that.

Speaker A: Yes, I feel like Americans both love Social Security, but yeah, they wouldn’t actually take to the streets and set fires to anything or do anything.

Speaker A: Wild.

Speaker B: Fire F-I-R-E Financial Independence.

Speaker B: Retire early.

Speaker B: Now the French are going to start adopting that.


Speaker B: So I want to have a Slate Plus segment where we talk to Elizabeth Spires about her Silicon Valley bank account or her Silicon Valley bank bank account, I should say.

Speaker B: That’s going to come up.

Speaker B: But for the rest of us, thank you for listening to Slate Money.

Speaker B: Thank you very much to Patrick Ford and to Anna Phillips for producing.

Speaker B: Thank you for sending in all of those questions via email, which we didn’t even need to ask you to do because you guys know us by now, and yeah, we’ll be back next week with more Slate Money.

Speaker B: Okay, Elizabeth, for the Slate Plus segment, this is just going to be you and me.

Speaker B: We don’t even need Emily for this one.

Speaker B: I want you to tell me what it was like to be a Silicon Valley Bank customer over the course of those three days friday, Saturday, Sunday and then into the following week, where you actually wrote in the new york Times that you were going to save your Silicon Valley bank debit card as like a souvenir the clear implication in that piece was that you were done with this bank and that you were going to leave.

Speaker B: Was that what you meant?

Speaker B: And is that still the case?

Speaker A: Yes and no.

Speaker A: So, just for context, in 2017, I was trying to raise money for a digital media company, and I was pitching some top tier Silicon Valley VCs.

Speaker A: And so, as I wrote in the piece, whenever you pitch these guys, and they’re almost always guys, you are expected to use vendors that they approve of for tech.


Speaker A: That really was Silicon Valley bank.

Speaker A: And then if you needed a lawyer, wilson sancini or Morrison and Forster.

Speaker A: So I opened an account at Svb, and part of the process of opening the account entailed me explaining who I would be talking to.

Speaker A: And that’s one of the mechanisms through which the account managers there would sort of vet you.

Speaker A: I ended up not closing the round, but I kept the account for various reasons.

Speaker A: And so last week, last Thursday morning, I think I tried to wire some money to a vendor and it was just taking forever to go through.

Speaker A: And I remember thinking, this is odd because Svab has really good customer service and the wire process is super fast.

Speaker A: And as a bank on the customer end of it, they were great.

Speaker A: But then I sort of saw what was happening and everything just imploded very quickly.

Speaker A: But my firm wasn’t really in much danger because we didn’t have very much money there.

Speaker B: So we understand that you were a client and that things got a little bit hairy for a day or two there.

Speaker B: But was there a point it felt like there was a point reading your New York Times column, that you felt like you didn’t want to continue being a customer of this bank, even though they have historically had very good customer service.

Speaker B: Is that still the case?

Speaker A: Oh, sure.

Speaker A: Well, we didn’t know what was happening with it or whether it would still be around in a week.

Speaker A: And it did sort of emphasize to me the value of having multiple accounts at multiple places, especially if my business now is more of a small business.


Speaker A: I don’t need a line of credit or anything like that.

Speaker A: I really just need a business checking account.

Speaker A: So Svb was maybe a little overkill for what we do now anyway.

Speaker A: But I think anybody who still has money there, you’re just sitting, waiting to see what happens with the bank now, who buys it.

Speaker A: I think for my purposes, I’m going to open an account at a bigger bank, which makes more sense for us anyway.

Speaker A: But I mentioned that I would keep my Svb card because it has a giant arrow that’s part of the logo that faces in exactly the opposite direction that you put it into a card reader.

Speaker A: So I think of it as a good example of a design that went through no user testing, because every time I would jam it into card reader, it would take me a second to realize that I was putting it in the wrong way.

Speaker A: And so I turn it around, irritated and jam it back in.

Speaker A: And then it would work.

Speaker A: But yeah, so I guess I do think that most people who really need a bank like Svb are just waiting to see what happens.

Speaker A: And there are some people who’ve just had it with the whole situation.

Speaker A: They’re going to go find different bank anyway.

Speaker B: So you think that for all that, the bankers at Silicon Valley Bank were very good and they understand their industry and the customer service was good.

Speaker B: Basically three days of just chaos and scic stepping in is enough to drive a lot of people to just close their accounts, move somewhere else.


Speaker B: And for all that, Silicon Valley itself has been putting out these open letters saying like, we like you and we’re going to keep on banking with you.

Speaker B: And Silicon Valley Bank is putting out all of these notes to its own customers saying like, we’re still here, keep on banking with us.

Speaker B: Your deposits are unlimited, guaranteed.

Speaker B: Everything is the same as it ever was.

Speaker B: On some level, people don’t believe that.

Speaker B: They’re like, it’s going to get sold, it’s going to get sold to someone who doesn’t get it.

Speaker B: They’re going to change everything.

Speaker B: And I had a bad weekend so f*** it, I’m out.

Speaker A: Yeah, I think some people are just not going to have the patience to sit around and wait.

Speaker A: I do think that there are a lot of high profile VCs and founders who have said they’re putting their money back into the bank and they want to support it.

Speaker A: But I think most people are just sitting and waiting to see who’s going to take it over so that they can evaluate management, see what’s different this time.

Speaker A: I think also one thing that sort of happened over the last few days is that there are a lot of founders who started moving their deposits to First Republic and now that seems like a little shaky too, although less shaky than it was at the beginning of the week.

Speaker A: So now it’s just a wait and see game, except for people who are just already impatient and don’t have the bandwidth to evaluate what’s going to happen and just want to have their banking relationships stable and already taken care of.

Speaker B: So you’re out.

Speaker B: And you would expect that a bunch of other people, just for sheer reasons, they don’t like uncertainty and they don’t know it’s going to be great going forwards, are not going to give the new guy to Mayopolis and the existing staff like the benefit of the doubt.

Speaker B: They’re just going to say no.

Speaker A: Yeah, I think that’s true.

Speaker A: Which by the way, if I were going to go out and raise money again for the same corporation, I would probably keep my account open because I think it is still a little bit of a different situation when you’re raising an equity round.

Speaker A: I ended up only using the sort of checking operations for what we do now.

Speaker A: So my incentives are not exactly the same as a lot of the depositors who got bit equity investments from venture capitalist and ended up at Svb for that reason.

Speaker B: All right, Elizabeth Myers, thank you for your tale.