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Matt Levine (Bloomberg) has discussed recently, how it is not entirely out of the question that the basic idea of any bank "investing long-term" (i.e. loans, T-
by rossdavidh 3y ago
Matt Levine (Bloomberg) has discussed recently, how it is not entirely out of the question that the basic idea of any bank "investing long-term" (i.e. loans, T-bills, etc.) with the money from short-term deposits, might be dying. The deposit money is far, far easier to pull out now, and since bank-runs are self-fulfilling prophecies...
- FormerBandmate 3y agoThat is the entire foundation of the economy. It is not dying, but we are all fucked if it does
- NotYourLawyer 3y agoNah the government could shore it up pretty easily. Just get rid of the cap on FDIC coverage and bank runs aren’t really a problem anymore.
- rossdavidh 3y agoOne theory is that private equity that needs to find places to invest, will provide the cash, and banks provide the places to invest it. In other words, the taking-deposits and the providing-loans parts of banks would no longer be connected to each other. Don't know if it will actually happen that way, of course.