The collapse of Silicon Valley Bank (SVB) wasn’t just a financial misstep — it was a case study in policy failure. This episode unpacks how perverse incentives, such as deposit insurance and limited liability, can encourage banks to gamble with society’s savings. It also delves into how regulatory incompetence and political pressures left regulators either unable or unwilling to act, leading to contagion effects across the banking sector. The SVB crisis is a warning sign: as long as policies prioritize short-term gains over systemic stability, financial crashes will remain a recurring threat.
Check out more from Ross Levine:
Read “Competition, Stability, and Efficiency in the Banking Industry” by Ross Levine here: https://www.hoover.org/research/competition-stability-and-efficiency-banking-industry-0
Watch “Much Money, Little Capital, and Few Reforms: The 2023 Banking Turmoil” with Ross Levine here: https://www.youtube.com/watch?v=Gf2E1aVh-pM
Read Ross Levine’s Commentary “Trump Wants to Unleash the Banks. End the Bailout Culture First.” in Barron’s Magazine here: https://www.barrons.com/articles/trump-bank-deregulation-2008-dodd-frank-3a94a33c?reflink=desktopwebshare_permalink
Learn more about Ross Levine here: https://www.hoover.org/profiles/ross-levine
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The opinions expressed in this video are those of the authors and do not necessarily reflect the opinions of the Hoover Institution or Stanford University.
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