How to fix the banks without more regulation WashTimesOpEd
, didn’t make lousy investments. Like all banks, it borrowed short by promising to redeem deposits on demand and invested long by financing businesses and mortgages and purchasing reasonably safe securities.
That’s a risky but necessary proposition because if depositors get nervous about a bank — for good reason or bad — and too many quickly withdraw funds, it can’t retire loans and sell securities quickly enough. Then it fails.catered to the needs of startup companies, their employees and founders with good, fast service and products tailored to their needs. Reflecting the community’s values, it financed affordable housing, minority businesses and green energy projects.
These were not incompetent bankers — they had a solid loan book because they knew their community — that they could lend to and trust. Witness the considerable interest in purchasingStartups with good ideas and competent leadership attract a lot more funds than they immediately need and deposit considerable sums at banks.
As stock prices fell in 2022, venture capital got scarcer, and startups withdrew deposits to meet payrolls and other expenses — and perhaps earn higher interest rates in money market funds and similarly short-term investments. Deposits fell last year, but the situation was manageable. In the first few months of this year, withdrawals accelerated, andOn March 8,
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