The bank was allowed to move outside the government's protection, taking on way more financial risk than regulators ought to permit and accepting massive, uninsured cash deposits from flush startups. That's what SVB's boss Greg Becker argued, and he got what he wanted. Bureaucratic interference would just keep everyone from building value. In SVB's case, the argument went something like this: Silicon Valley Bank was different from other, stodgy banks, in part because it was too small to warrant the kind of regulatory oversight that resulted from the 2008 financial crash, and in part because it was too critical to the fast-moving disruptive world of startups and venture capital. This cycle of bold sowing and whiny reaping is how the West was won. Then they got massacred and came running back to Fort Washington, demanding that the people in charge expand the boundaries of the camp outward to protect their precarious settlements. After declaring themselves ungovernable - mavericks too free-spirited to be shackled to polite society - they headed into the wilderness to live off nothing but their rugged individualism.
They were pioneers on the frontier of tech and finance, and as such they acted the way pioneers always do. It's a robber-baron classic.īut because the bankers in question here saw themselves as innovating the way startups get funded, their bleating for government aid actually comes from a whole other wellspring. But when it's their money on the line, they're all for privatizing the profits and socializing the losses.
Sure, they like to mock colleges as "woke madrassas" and condemn student-loan forgiveness as a moral hazard. When capitalism goes kersplat, even the most libertarian Peter Thiel adherents turn into New Dealers. Our opinions are always our own.Īs Silicon Valley Bank went down the tubes, it wasn't surprising that the loudest mouths in Techworld started demanding that the federal government cover everyone's losses. Paid non-client promotion: In some cases, we receive a commission from our partners. Our experts answer readers' investing questions and write unbiased product reviews ( here's how we assess investing products). Account icon An icon in the shape of a person's head and shoulders.
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