Risky Business: More Bank Collapses Ahead? Allison Schrager
How Do We Fix It?23 Mars 2023

Risky Business: More Bank Collapses Ahead? Allison Schrager

Rising interest rates and the end of easy money were two factors in the sudden collapse of Silicon Valley Bank (SVB) and a subsequent stock market run on shares of regional banks. Questions were raised about the safety of the entire U.S. banking industry.


We examine risk in banking, investing and the broader economy.


Federal regulators faced harsh criticism for the latest bank failures. Progressives blamed politicians who eased regulations on medium-sized and small banks. Some on the right claimed that DEI — Diversity, Equity and Inclusion — distracted SVB from focusing on risk management.


Our guest is economist and risk expert Allison Schrager, author of "An Economist Walks Into a Brothel: And Other Unexpected Places to Understand Risk". She also writes frequently for Bloomberg Opinion and City Journal.


This episode looks at the causes of the recent bank panic and the current outlook for the financial industry.


"Safety is the foundation of finance and it is also how we price risk," Allison tells us in this episode. Everyone assumes that holding government-backed securities is safe. "But long-duration bonds are very sensitive to changes in bond yields." If interest rates go up, "bond prices on long-dated securities go down a lot."


SVB was heavily invested in these securities. But many of its depositors, including tech firms and venture capitalists, were highly sensitive to rate rises. In mid-March, despite reassurances from top executives, SVB's depositors pulled their money out. It was a sudden online version of an old-fashioned bank run.


We look at potential solutions and hazards for investors and the economy, including the perils of inflation, the dangers of groupthink, why investors and bank executives should feel some pain when an institution fails, and the need for risk management that takes a broad range of economic possibilities into account.


Allison recently wrote this about why Silicon Valley is facing rising threats to its business model. The latest column for Bloomberg cautions savers and investors: don't make the same mistake as SVB with your 401k.


Recommendation: Richard plays this word game almost every day: Spelling Bee, a somewhat addictive game from The New York Times.

Hosted on Acast. See acast.com/privacy for more information.

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#5 We Need More Free Range Kids: How Do We Fix It?

#5 We Need More Free Range Kids: How Do We Fix It?

Do helicopter parents need to come in for a landing? Lenore Skenazy, host of the cable TV show, "World's Worst Mom", says yes. The founder of the parenting movement Free Range Kids is Jim and Richard's expert guest. Skenazy argues society fills parents with fear about what might happen to their children. http://www.freerangekids.com/ Hosted on Acast. See acast.com/privacy for more information.

18 Juni 201526min

#1 The Tech Threat To Your Kids: How Do We Fix It?

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Computers, video games and mobile devices are a huge temptation for kids. But are they really a threat, or instead a great opportunity for children to learn about the world? In this show Jim and Richard are joined by developmental psychologist Abigail Baird of Vassar College. The mother of two 6-year old twins and an expert on the teenage brain, Abigail has some fascinating fixes for parents who want to strike the right balance on tech for their kids. http://psychology.vassar.edu/bios/abbaird.html Hosted on Acast. See acast.com/privacy for more information.

21 Apr 201529min

#2 Why We're Bored and Frustrated At Work: How Do We Fix It?

#2 Why We're Bored and Frustrated At Work: How Do We Fix It?

The numbers are alarming. A recent Gallup says that less than one-third of American workers are engaged in their jobs. Millions of employees are either bored or completely fed up. In addition to the human misery this causes dysfunctional workplaces damage businesses and harm the economy. Ron Friedman is the author of "The Best Place to Work: The Art and Science of Creating an Extraordinary Workplace." He has some great tips for both employers and employees.http://thebestplacetoworkbook.com/ Hosted on Acast. See acast.com/privacy for more information.

30 Mars 201532min

#4 Government Red Tape Is A Nightmare: How Do We Fix It?

#4 Government Red Tape Is A Nightmare: How Do We Fix It?

All of us pay taxes, but how well is that money being spent? Many government services are poorly delivered. From the local DMV or zoning department to the Pentagon and Department of Veterans Affairs, government can be a big tangled mess. For decades, Philip K. Howard has been a leading expert on how streamline government and make it work for all of us. His latest book is "The Rule of Nobody." In this episode, Richard, Jim and Philip a lively conversation about the problem and how to would fix it. http://philipkhoward.com/book/the-rule-of-nobody/ Hosted on Acast. See acast.com/privacy for more information.

17 Mars 201531min

#3 Drowning In Credit Card Debt: How Do We Fix It?

#3 Drowning In Credit Card Debt: How Do We Fix It?

Credit card debt is once again on the rise. The average U.S. household that borrows money with high interest credit cards owes $15,000. Many people are overwhelmed by monthly bills. Expert Beverly Harzog has seen the problems from both sides. Author of two helpful books, "Confessions of a Credit Card Junkie," and "The Debt Escape Plan", Beverly knows all about the crisis of bad credit and how to dig yourself out from debt. www.beverlyharzog.com Hosted on Acast. See acast.com/privacy for more information.

14 Mars 201532min

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