News From the Control Tower - 3/22/2023
News from the Control Tower: Our weekly curated list of news stories affecting you and your finances.
I’m currently reading and really enjoying Lauren Hough’s book of essays, “Leaving Isn’t the Hardest Thing”. When I saw she had a new piece published in Texas Highways, I stopped to read it.
Her story, which explores her grandfather’s (tall?) tales of growing up in the Texas panhandle, turned out to have great parallels to today. He grew up in the Dust Bowl, where his family lost their farm to a bank. In his view, it was the bank who stole his horse. He grew up daydreaming of robbing a bank, and told stories of aiding Bonnie & Clyde.
In general, each financial or banking crisis reveals some type of hole in the regulations of banks, and our society and politicians will respond in kind. Generally that reaction comes from a good impetus – people want to prevent the destruction of lives like we saw in the Great Depression. But Jason Zweig asks some great questions in his Wall Street Journal piece this week. At what point does having too much guaranteed safety actually start to increase the risks that bankers take? As Charlie Munger said, paraphrasing the late economist Allan Meltzer, “Capitalism without failure is like religion without hell.”
What legacy will today’s bank robbers leave? Do we have more Bonnies and Clydes waiting in the wings?
A grandpa’s tall tale sends a Panhandle native back to the scene of the crime
2. How deep is the rot in America’s banking industry?
Silicon Valley Bank may be the start of something grimmer.
3. SVB’s Loans to Insiders Tripled to $219 Million Before It Failed
The bank’s weaknesses came to light as the loans surged.
4. What Gets Lost When You Rescue Markets
Throwing a lifeline to the financial system in times of crisis can have unintended consequences. Among them: Making the world feel safer can lull people into complacency and excessive risk-taking.