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Slumberkins and SVB
- Slumberkins, a children's toy company, banked with Silicon Valley Bank (SVB).
- During a business trip, they learned SVB might be in trouble and faced difficulty accessing their funds.
SVB Failure Explained
- SVB's failure stemmed from investing in long-dated treasuries during a period of low interest rates.
- When interest rates rose, and startups began withdrawing funds, SVB had to sell bonds at a loss, causing a bank run.
Government Intervention
- The government ensured all SVB depositors would be paid, even those exceeding the $250,000 FDIC limit.
- This intervention aimed to prevent systemic risk, but critics argue it creates moral hazard.