The Seen and the Unseen - hosted by Amit Varma cover image

Ep 323: SVB, Banking and the State of the Economy

The Seen and the Unseen - hosted by Amit Varma

NOTE

The complex issue of moral hazard in banking

There are differing opinions on whether the bailout of Silicon Valley Bank creates moral hazard. The shareholders and executives of the bank have not been bailed out, and the depositors have. Some argue that this is not a true bailout, while others point out that depositors should not have to worry about the riskiness of their bank. However, the competition for deposits means that banks take on risk when offering higher interest rates. The issue is complex and goes beyond a simple statement of moral hazard.

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