But I think the modern bank-regulatory view is that the point of a bank deposit is that you shouldn’t have to worry about it , and that it is a failure of bank regulation if depositors of any size have “to actually give a moment’s thought to the riskiness” of a bank. (Bank deposits are meant to be “ information insensitive .”) There are vast areas of life where we don’t worry about moral hazard. We don’t say things like “the moral hazard of food safety regulation is that we’ve greatly reduced the incentive for consumers to give a moment’s thought to the riskiness of their supermarket’s supply chain.” That’s not a thing you’re supposed to think about!
Money Stuff: SVB Took the Wrong Risks
from Matt Levine ✉️
Filed under:
Related Notes
- If all the burghers of Small Town USA get together and say “we want...from Matt Levine
- It is funny to imagine an end state here in which markets are entir...from Matt Levine
- After 2008, there was a perception that the government was implicit...from Matt Levine
- from the SEC’s perspective the important thing here is that the rul...from Matt Levine
- if the US government *does* default, that will probably cause the p...from Matt Levine
- The very most important thing to understand in finance and economic...from Matt Levine
- Every so often the US government thinks about defaulting on its deb...from Matt Levine
- The three bank runs which already happened had idiosyncratic causes...from Bits about Money