Good morning.
Is the banking crisis over? I think the answer is yes, for now. The government has said it will, in effect, guarantee all bank deposits, which should eliminate the incentive for bank runs. I thought the CEO who took over SVB’s operations—Tim Mayopoulos—was being a little cheeky yesterday when, according to The Information, he told customers that there is now “no safer place” to put their deposits than his bank, because the government guarantee is explicit there. The truth is, the government has effectively guaranteed all deposits, everywhere. You can take that to the bank.
Still, this is about psychology now, not finance. And there is no accounting for the possibility that some nervous corporate treasurers around the country may be pulling all their deposits over $250,000 out of regional banks just in case the government doesn’t stick to its promise. Could that cause some other banks to fail? Possibly. But the stock market seems to suggest that threat is waning. And to be honest, even if the FDIC did take over a couple more badly managed regional banks, it wouldn’t be the end of the world.
The bigger issue for the moment is what the Fed will do on interest rates. While markets have consistently misjudged Jay Powell over the past year, I think they have it right this time. He’s going to be very reluctant to raise rates if there is still any hint of financial fragility. That's too bad, because the latest inflation numbers show no sign of abating, and less Fed action now will only mean more Fed action later.
Separately, I had an interesting conversation this week with Mitch Kapor, who is one of the giants of the computer age, having created Lotus 1-2-3. He and his wife Dr. Freada Kapor Klein have a new book out, called Closing the Equity Gap, which calls on venture capitalists to use their superpowers to help reduce inequality. I asked him whether traditional VC investing made inequality worse. His answer:
“There are some that actually widen those equity gaps. It’s a result of an extraordinarily narrow-minded focus on putting financial returns above all else, coupled with the idea that doing anything that is pro-social impact is necessarily going to be concessionary.”
Kapor believes his investing record over the last decade, which he details in the book, shows “that is just not so.” And he takes heart from the fact that while his industry “still has a very long way to go,” there are “an increasing number of investors in the tech space, particularly at early stage, that do work with a focus on social impact.”
You can find the book here. Other news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
