What we’re reading (3/11)
“Silicon Valley Bank Collapse Sets Off Blame Game in Tech Industry” (New York Times). “For once, the crisis didn’t seem to revolve around a cryptocurrency company. The sudden collapse of Silicon Valley Bank on Friday set off panic across the technology industry. But crypto executives and investors — who have endured a year of near-constant upheaval — seized on the moment to preach and scold.”
“Where Were The Regulators As SVB Crashed?” (Wall Street Journal). “The Federal Reserve was the primary federal regulator for both banks. Notably, the risks at the two firms were lurking in plain sight. A rapid rise in assets and deposits was recorded on their balance sheets, and mounting losses on bond holdings were evident in notes to their financial statements.”
“With SVB It Takes A Village...To Mess Things Up This Badly” (RealClear Markets). “SVB bought my business in 2001 and I worked there as a senior executive for 2 1/2 years. I’ll offer a little insight into what went wrong….Any bank has three main actors; the bankers, the customers (depositors and borrowers, which often are the same), and the regulators. Let’s start with customers, who in this case had to be incredibly naïve and irresponsible to believe deposits in any bank above the insured limit of $250K are riskless. But then VC’s and tech companies have a long history of being terribly neglectful custodians of cash. They believe that their purpose in life is to make great things, and cash management is just a nuisance. The vast majority of responsible corporations and money managers put excess cash in money market programs, which invest in highly-rated, short-term securities like T-bills. In fact, SVB had just such a program that the responsible, non-lazy corporations used, and those funds will be unaffected by the collapse of the bank.”
“Fewer People Are Going To College. That Could Be A Good Thing.” (Reason). “Fewer and fewer young people are enrolling in college after graduating high school. However, while many have presented this decline as tantamount to a national emergency, declining college attendance rates may actually be a good thing. Lower enrollment sends the message that four-year colleges need to lower their inflated prices. Plus, the decline may actually be coming from students who were already likely to drop out of school without a degree. By skipping school, many are saving themselves from accruing unnecessary debt for a degree they likely would never have obtained.”
“Do Non-Profits Drive Social Change?” (Comment). “If high-net-wealth coastal elites donate their money and time to non-profits, surely they must be important. The mainstream media helps cement this image. Ever seen the ‘How to Spend It’ section of the Financial Times, or comparable supplements from the Wall Street Journal or the New York Times? Though most media figures are not high net wealth and have little to do with non-profits, they are pandering to the high-net-wealth crowd. So if the high-net-wealth crowd has a psychological bias toward non-profits, both elite and mainstream media will track and reinforce that trend. These biases deserve to be challenged. Just how important are non-profits really? I think we still don’t know, and I have been involved with non-profits my entire life.”
