April 27, 2023
Boston Business Journal recently recorded a podcast featuring Mark Williams, Master Lecturer of Finance on the key takeaways from the collapse of Silicon Valley Bank and the current banking crisis in the U.S.
Factors like cryptocurrency’s lack of regulation, bank laziness, and high risk taking contributed to the downfall of SVB, who relied on depositors to stick with the bank. This financial crisis benefited the top 6 banks, including Wells Fargo and JP Morgan, controlling almost 90% of U.S. deposits.
Williams adds that, “Overreliance on deposits that are not FDIC insured is extremely dangerous…deposit money should be viewed as being very dangerous.”
To combat future crises, businesses need to separate their deposits and have them insured by FDIC, while smaller banks should return to making good loans and accepting deposits.