Main Street has come to resent both Wall Street and Silicon Valley. What will it make of the failure, and bail-out, of a bank at the centre of venture capital?
We all remember Occupy Wall Street in 2011 – when protestors claimed a small patch of land in New York’s financial district to express their disgust that too big to fail banks blew up the economy and cost them their jobs.
Others would push back on that. The bank had sufficient assets to make depositors whole, and after all these companies weren’t taking excessive risk but holding their money at a regulated institution.A move to backstop uninsured deposits creates both moral hazard and an enormous contingent liability for taxpayers that all savers will be protected.
The other is that the world seems to have moved on the 2008 financial crisis. As we learnt during 2020 and 2021 with the If there is a cultural moment it is perhaps to expose the double standards of the venture capital sector – among the biggest beneficiaries of low-interest rates, but allocated the wave of capital that came its way in a questionable and short-sighted manner.
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