Silicon Valley Bank had the highest percentage of its portfolio in mortgage-backed securities. The bank's depositor base was heavily skewed towards large accounts as opposed to Bank of America or something where most of the accounts are held by many small customers. And so they had these big deposits, and then literally what happened on what we're all trying to figure out is that Peter Cevallos tried to get his money back from Silicon Valley Bank for some reason.
Transcript
chevron_right
Play full episode
chevron_right
Transcript
Episode notes
The English word ‘bank’ meaning a depository and lending institution, derives from the Italian word ‘banca’, or ‘bench.’ This belies the origins of modern finance in Renaissance Italy, where deals initially struck at coffee house benches evolved into the great trading and banking houses of the Medicis, where double-entry book keeping enabled the matching of debtors with creditors that spurred the growth of industrial Europe over the coming centuries. Today, with daily capital flows measured in the trillions of dollars enabled by high-speed fiber optics and a global communications network, major decisions happen much more quickly, and because of the levered nature of fractional reserve finance, regional concern can magnify into global contagion faster than an actual pandemic. In the case of last weekend, where Silicon Valley Bank, one of the top-30 global banks went into receivership, the political institutions of the United States were caught off guard, and in an attempt to quell further concerns, went into overdrive this week as the Federal Reserve discount window was opened guaranteeing the assets of all major banks. Not to be outdone, the Swiss National Bank just intervened in the takeover of Credit Suisse, a century and half years old institution, to further halt panic in European markets. Memories of the 2008 financial crisis are on everyone’s mind, and the ripple effects of these events are surely to continue throughout the year.
