Plain English with Derek Thompson The SVB Debacle: The Biggest Myths, the Out-of-Control Blame Game, and the Worst Takes
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Mar 15, 2023 
Michael Batnick and Ben Carlson, co-hosts of the Animal Spirits podcast, dissect the unraveling of Silicon Valley Bank and the narratives that followed its collapse. They delve into the blame game directed at the Fed and venture capitalists, while emphasizing systemic issues over individual fault. Their discussion includes parallels with historical banking crises, the influence of small banks on financial stability, and the evolving trust in the economic landscape amid rising inflation and potential recession.
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Homogenous Customer Base
- SVB's collapse was accelerated by its homogenous customer base.
- Tech startups, connected on social media, quickly spread panic and initiated a historic bank run.
Diversity Blame
- Andy Kessler controversially blamed SVB's failure on diversity, ignoring historical bank failures.
- The Wall Street Journal, where Kessler published, has documented numerous panics before diversity was prevalent.
Swift Government Action
- The government's decision to guarantee deposits averted a larger banking panic.
- By acting quickly and ensuring financial stability, they mitigated potential economic damage.