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The perverse incentives created by Deposit Insurance

The origin of these is well summed up here:

“I can assure you that when you don’t have the full faith and credit of your government you care a lot about the management of systematic risk. I don’t think anyone at Silicon Valley Bank cared about it a damn bit.” (because depositors had deposit insurance – and management could go wild).

  1. Eye2theLongRun's avatar
    Eye2theLongRun
    June 11, 2025 at 9:28 am

    from Ken Griffin, Citadel (hedge fund, quote courtesy of the Economist)

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