Recently the Silicon Valley Bank (SVB) failure became one of the largest bank failures in the U.S. since the global financial melee. SVB’s instability was based on a large portion of uninsured deposits, while another large portion of deposits were invested in hold-to-maturity securities. While some would like to attribute SVB’s failure to the Dodd-Frank rollbacks under the Trump administration, others suggest the collapse was due to faulty management decisions by the bank leadership. Unfortunately, amid rising interest rates and other inflationary issues, SVB is not a lone bank in terms of its fragility and disproportionate impact on both consumers and businesses. Additional regional financial institutions were also impacted, like First Republic Bank, whose deposits were bailed out by J.P. Morgan Chase, and just recently Pacific Western which now needs a similar cash infusion to maintain operations. Amid these failures, tech companies have fallen vulnerable to such instabilities, especially those who held a large proportion of their assets in these banks or were afforded access to capital.
In this episode of the TechTank podcast, co-host Nicol Turner Lee will be joined by Aaron Klein, the Miriam K. Carliner Chair in Economic Studies and senior fellow at the Center on Regulation and Markets at the Brookings Institution. They discuss how the technology sector has been impacted, and what the future of banking looks like as the U.S. addresses inflationary concerns and interest rate hikes.