a16z Podcast Can Community Banks Survive the Next SVB? | ModernFi CEO Paolo Bertolotti and Former Comptroller Gene Ludwig
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Nov 20, 2025 
Gene Ludwig, former U.S. Comptroller, and Paolo Bertolotti, CEO of ModernFi, dive into the implications of the SVB collapse. Ludwig reveals how the failure highlighted fundamental flaws in banking technology and regulation. They discuss the necessity of deposit networks to protect community banks and tackle uninsured deposits. ModernFi's innovative solutions aim to boost banking stability by creating a bank-owned consortium, Envid, to enhance insurance coverage and support community institutions amid fears of consolidation.
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Internet-Driven Runs Create New Tail Risk
- Silicon Valley Bank collapsed not for fraud or bad loans but because customers could move money faster than regulators could respond.
- The internet turned a manageable mismatch into a systemic, technology-driven bank run that regulators were unprepared for.
Regulatory Response, Not Just Balance Sheets
- Gene Ludwig argues the SVB failure was both inevitable and unique due to asset-liability mismatch plus fast tech-enabled runs.
- He says the Fed could have halted the run earlier by opening the discount window wider and sooner.
America's Fragmented Banking Is A Feature And Risk
- The U.S. banking system is unusually federated with ~10,000 banks and credit unions, which supports local credit and innovation.
- That fragmentation is a competitive advantage for local lending but also creates systemic complexity and vulnerability.
