The rescue of depositors in Silicon Valley Bank proves again the banking system is public assisted, privately operated.
After all, banks do provide public utilities - as blood vessels to circulate money to where it is needed, for consumers and businesses.
š„ This becomes similar to healthcare.
The external funding makes sure the hospital continues to open. Patients do not need to worry that the lights will go out while they are in the operating room.
But, if a hospital has a bad reputation from past medical accidents, why do patients want to visit it vs. another operator?
š Safety of deposit is a minimum standard. If that is guaranteed by the regulator, what unique utilities a bank can provide to attract ongoing business?
That is the challenge for First Republic Bank - whose stock price was still on a roller-coaster, even after the $30 billion aid from 11 large banks.
It is also a challenge for many others in the long run.
Comments