The Prof G Pod with Scott Galloway Prof G Markets: SVB’s Collapse, the U.S. Banking System, Venture Catastrophists, and What’s Next
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Mar 20, 2023 
Ed Elson, a Prof G Media Analyst, joins to dissect the fallout from Silicon Valley Bank's collapse and its alarming implications for the U.S. banking sector. They discuss how branding influenced the crisis and the emergence of a two-tiered venture capital landscape. The conversation also touches on future regulations, potential acquirers for SVB, and the vulnerabilities facing commercial real estate, highlighting a concerning parallel with the bank's downfall.
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Banking System Leverage
- Banks lend out more money than they hold, leveraging the system to stimulate economic growth.
- This system relies on trust and the assumption that not everyone will withdraw their deposits simultaneously.
SVB's Vulnerability
- SVB's high investment in illiquid long-term assets made them vulnerable to interest rate hikes.
- Their concentrated client base in the tech sector further amplified the risk of a bank run.
Two-Tiered Banking System
- The government bailout created a two-tiered banking system, favoring larger, more secure institutions.
- This consolidation reduces competition and potentially harms consumers with higher fees and fewer services.