Another thing I'd like to add: There is a *ton* of content on Mastodon, especially, that passes for "analysis" that is just thinly-veiled partisanship / bias that gets shared and re-shared because it fits the readers' preconceived notions.

Mastodon is better than Twitter in a lot of ways.

But, like all social media, they have *a lot* in common.

Mostly: They're both echo chambers of half-baked takes.

@mimsical I absolutely agree.

Unfortunately, for both good reasons and bad, "big tech" is a boogieman (and I say that as someone who is on Mastodon because of my own disdain for much of the industry), and this event is being fit into that preexisting narrative.

The result is news articles that feel more like dunking on the industry than real, sober analyses of root causes and actual solutions.

@mimsical

"Tech is broken" and "there is insufficient regulation" are not mutually exclusive, and may actually be related. Tech libertarianism helped fund the weakening of regulations, after all.

@mimsical I think you are misunderstanding the narrative.

The philosophy that removed regulations is the same one reigning in the top techbros worldviews.

@mimsical maaaybe, through that strikes me as a bit of a false dichotomy. Yes, the 2018 Crapo deregulation + mediocre management of the bank’s assets are the root cause, but it’s entirely possible SVB would still be solvent were it not for the herd of jittery VCs.

And the reason there’s so much jeering at the tech angle is the Ayn Rand fanclubbers are the ones calling for more of that very deregulation.

I just don’t see this playing out with Third Farmer’s Bank of Iowa City.

@mimsical
It's almost mathematical truth that banking is unstable unless backed by government:

Banks take deposits, most of which can be claimed at moments notice. They give out loans over longer time frames. Nothing can save a bank if all depositors call.

If rumors start about a bank run, the rational action is to take part in it. The vicious circle spins. Instability.

The only working backstop is a government that can print money. But that means it must also regulate, QED.

@mimsical nah, while banking regs _might_ have helped, they can't stop all bank runs, especially not when driven by the kind of herd mentality that VC funders are so very prone to.

There's a whole lot of things that would have made this Not Happen, including SVB just thinking for three minutes about interest rate risk and correlation with startups.

@mimsical Bank runs don't happen because there is too little regulation. Banks *fail* during a bank run because they aren't sufficiently resilient, which is one thing that financial regulation tends to try to strengthen.

A well-capitalised bank can withstand a bank run, perhaps even down to its last dollar. Weaken or remove regulation, and you might end up with less-resilient banks who can't. SVB, it turns out, was not remotely a resilient or well-capitalised bank.

@mimsical

Regulations matter

@mimsical "This is not a tech issue, it's a banking one.”

It's both.

@mimsical It's definitely both.

With a side dose of Silicon Valley companies failing to use known tech to handle payroll across multiple bank accounts to preserve FDIC protections, & doing insane shit like keeping half a billion $ in one bank (Roku).

@mimsical Krugman makes the same point in today's NYT: https://www.nytimes.com/2023/03/14/opinion/silicon-valley-bank-bailout.html

A short piece like that can't properly substantiate its arguments, so feels more like opinion than 'proper' analysis but, as 'hot takes' go, it seems on target.

@mimsical both things are true.

yes the banking regulations loosened — by silicon valley specifically demanding them — which made the initial error possible

but a handful of VCs called up their portfolio companies and triggered a bank run of billions within hours — something virtually impossible to trigger for any normal bank w normal customers — when the bank would’ve been able to recover from the MINOR deficit if given a little bit of time & ecosystem support