Reading list
Shortform reading
This is an incomplete list of the shortform reading (and listening and watching) I’ve been doing lately.
Monopoly Round-Up: The Slow Death of Banking in America
Crypto interests came after the local banker last week in a bitter Congressional fight. They didn't win, but it's not over. Plus, the "Mamdani effect" is real, and Canada aligns with China.
The crypto industry has been spreading a tale of federal bank regulators persecuting crypto and forcing banks to "debank" crypto companies. Like the grossly mischaracterized Operation Choke Point, the crypto debanking narrative is utter and self-serving bs. At best, the actual evidence shows the FDIC expressing very normal and reasonable risk management concerns—that is, the FDIC was just doing its job. There is zero evidence that the FDIC ever threatened or directed banks not to do business with crypto companies.
The simple truth is that crypto companies were debanked by the market, not regulators. Banking crypto poses a unique, correlated credit risk that should rightly concern any bank's risk committee. Crypto companies present a risk of correlated chargebacks that makes them all potential Fyre Festivals, so banks with prudent risk management practices determined that it was a value negative proposition to provide banking services to crypto companies. That's the invisible hand of the market at work, not the invisible hand of the Deep State.
Dan Davies On What Brought Down Silicon Valley Bank (Podcast)
Understanding this unprecedented bank run
The Regulatory Blunder That Gave Us the Silicon Valley Bank Disaster (Podcast)
Time to bring back aggressive supervision.
Before Collapse of Silicon Valley Bank, the Fed Spotted Big Problems
The bank was using an incorrect model as it assessed its own risks amid rising interest rates, and spent much of 2022 under a supervisory review.