Unpacking Economic Myths and Fears Amidst SVB's Collapse and Fed's Oversight

Douglas Diamond, the Nobel Prize-winning economist, breaks down the collapse of Silicon Valley Bank (SVB) and its failure to follow sound management practices and regulation. SVB's strategy to "go out on the yield curve" to garner an extra 0.5% was a mistake, and its deposit base was extremely unstable. The rise in rates hit SVB's bonds and cut its capital down, and it was close to insolvent before the meltdown. Diamond warns that the Federal Reserve's oversight of regional banks is too light to prevent further blowups, and the Fed's super-tough policies have put banks in a difficult position.