87: SVB's Risky Bailout and The Bank Run “Domino Effect”
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The Business Model of Banks
In order to understand this issue, we need to get to the root causes and explain some of the background. The first thing we need to do is take a step back and talk about how banks work. Federal regulators require that banks keep a certain amount of deposits in the bank as quote unquote reserves. But if people lose confidence in the banking system, it can be a very serious, dangerous situation.
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