Is It Time For Public Checking Accounts at the Fed?

the implicit takeaway from the weekend announcement. And I know we spoke with Dan Davies and he made the point that historically it is rareferred depositors in modern financial times to lose a bunch of their money because normally bondholders and equity holders lose all their money when bank fails, and some of that gets taken away to pay the deposit holders because deposits have seniority over bonds and equity. But I still think this is a pretty big change.

It feels very major, or at a minimum, it feels like the implicit has been made explicit in a way that's before because yeah. Maybe in the end, even without any intervention SVB as depositors may have gotten whole. We don't know that there was no fire sale or anything like that. They just announced everyone is getting their money

back Signature bank too. And then that raises a second question, Well, if depositors are really always implicitly or explicitly guaranteed by the government, what is the point of having like private retail banking for profit retail banking. Why not just let everyone have a checking account at the FED and then you never have to worry about any of this. That's right. So we touched on this a little bit when we

spoke to love men end. But if you think about banks as providing an public function, you know, not only do they provide a safe place for people to actually put their money, but they also create money, you know, yea in the system. They lubricate the economy with credit. But they also tend to fail, sometimes repeatedly, as we're saying, and they also tend to get bailed out. Right, because the argument that you see time and time again is oh, you can't let this go because it would be bad

for the financial system as a whole. You don't want to publish these particular people or this group of people, because then you know what happens if the little guy is in trouble next time. What if it's a farmer's credit. There's always a farmer At the end. It really says something about I think people's moral intuition still that like the thought experiment is like replaced Silicon Valley with like

Kansas Farmers Bank or something. Right, But it's true. The point is true that a lot of people, like a people can't be expected to do due diligence, like on a bank. It's not realistic. Most professionals can't do that. But b it's also true that like there are a lot of quote innocent people who did not take like some crazy risk, who think they have money, and then the idea that they're told they don't like. I mean, the point is like the points are legit, well, we

should get into them. But I do think like overall, there is this question of and I think we're going to see even more of it. People are still digesting what's happening. But there's this question of, Okay, if we're going to keep supporting banks in quite dramatic ways, then why let them be private? Entities, yeah, or why not give them I guess like a closer relationship with the government in one way or another, whether that's a regulatory

function or something else. Right, there's all kinds of questions. I think we should get to our guests, because our guest, I really do believe we have the perfect guest, someone who's been warning about a lot of these exact issues for a long time, has anticipated a lot of these debates that people started having over the weekend, and who also has ideas about rethinking the banking system and what it means when some of these implicit guarantees become explicit.

We're gonna be speaking with Salle Amarova. She's a professor of law at Cornell. She also had been President Biden's original nominee to head the Office of the Comptroller of the Currency. Because of her perspective, she came under very sort of like vicious attacks, some by some moderate Democrats, a lot of attacks by sort of like the community and regional bank lobby and all the Republican senators. It

was a pretty awful affair. There was a lot of red baiting, basically accusing our guest of being a communist, very publicly because of wanting to have different thoughts about how the banking system works. But I kind of feel like some vindication over the weekend and people are sort of like rethinking a lot of what she's written about. So Professor Amarova, thank you so much for coming on

odd lots. Thank you so much for inviting me to day. Yeah. Absolutely, you know we're going to get into all of your thinking about how we can rethink the banking systement and so forth. But just sort of like very simply to start, as an almost regulator, what does the SVB disaster to say to you about flaws within the existing regulatory structure of banking. This is exactly the kind of questions that I like to think about or cannot help myself thinking about.

So while of course there are many immediate reasons for the failure of SVB in particular, there are also these sort of more deeper structural issues here that are on display. The first thing that we've learned is that the systemic risk in the financial system is actually a very complex and dynamic phenomenon. We are used to thinking about systemic risk caused by banks because banks invested in particularly risky assets, which they've done before. This is how we got the

tooth snate crisis. But in this situation, the assets themselves didn't seem to be quite so risky until the monetary policy tender changed. Right, So what it tells us is that past policy choices actually shape future policy constraints in this particular area. Another thing that sort of became really obvious here is that there is a lot of political

economy involved in bank regulation and the banking sector in general. Right, just like Joe what you said about how the rhetoric changes depending on who's asking for a bailout in a particular situation, right, And our perceptions change when people drug out the farmers. Suddenly everybody feels sympathetic this time around

its venture capital industry, Silicon Valley. It's sort of difficult to feel sympathetic right to these billionaires who usually are known for being quite libertarian and kind of not liking the government genuinely speaking. But most importantly, and I think that's the point you've been driving at early, is that this particular crisis really exposed the public nature of the

banking business, the deposit deposit taking the deposit money. Right, And this is precisely what my scholarship has been about for many many years. Banks are very special animals in

our free market economy because their products are twofold. On the one hand, they create money that we treat as equivalent to sovereign money, so we all basically use deposits as if that was you know, the US dollars, but of course their liabilities of private banks, private firms, And the key about deposits at the bank is that they

absolutely must be safe, must be perceived as safe. We need our money to be free of any doubt, so that everybody knows that when tomorrow go my bank or check my ownline back and bank account, the money that's been there is going to have its power value no matter what happens. And that is necessary because money is a public good. It is really essential lubrican to all

economic transactions. So in effect, public goods like safety and security, national defense, safety that we know that if there is a fire and then the fire brigade will come, you don't have to pay for it. Those kinds of things we traditionally perceive as public goods, and they're provided publicly,

and that's fine. But safe money is a public good exactly in the same way because it guarantees us the right to participate in economic exchange without being worried about the value of our money, the means of payment right. And the funny thing about that particular public good provision is that institutionally we have this system in which this public good is provided by private profitmaking firms banks. We

regulate banks, which charter banks. We try to kind of treat them as if they were franchises of the federal government, purveyors of this public good. But nevertheless they are doing it through private risk taking on their own balance sheet. In other words, we've coupled this money creation with their lending functions. So banks create money when they extend loans. Right when they extend loans they open deposit accounts into which they deposit is newly created purchasing power that didn't

exist before. And that is kind of ingenious because it connected the deposit taking capacity, the money creation capacity, with the sort of the judgment of supposedly kind of on the ground, really attuned to the needs of the economy, private banks that can judge which business, which house, which individual deserves that that kind of valcation of credit, and

that creates the elastic currency. This is how we basically have just enough money in the economy to satisfy all the needs of the productive economy, right, and that also creates that monetary policy transmission channel. So that's what connects the Fed and Central Bank to the private banks that extend money, allocate credit, and in the process of doing it, actually expand or contract the amount of money that we treat a sovereign money available in the economy. So it's

a very complex system. There's sort of a mismatch between the public money good and the private risk taking. But just to play Devil's advocate for one second, you know, one of the arguments that you do see going around is, okay, the ftic ensures up to two hundred and fifty thousand dollars, because the vast majority of people in the US do not have more than one hundred and fifty thousand dollars

in their bank accounts. But if you're a company with a lot of cash, presumably you're more sophisticated, maybe you have a treasury function whose job it is to actually manage that cash. Is there an argument to be made that as the pool of money gets bigger, people should be more attuned to managing it. And making sure it's not going into riskier banks. This is actually a very astute question and kind of the question that is on the minds of many people today, and there is an

argument for that, and the argument. One argument would be theoretical argument in a way to say that, look, let's just stop pretending that bank deposit money is not in fact public money, because it is publicly back. So let's just dispense with this fiction by removing that that cap so that everybody, wholesale depositors as well as retail depositors

don't really ever have to question and worry. And it would definitely eliminate the incentive to run on a bank by these big money holders who are now able to orchestrate these runs faster than they used to do it before. So it would be a systemic structural fix to this

problem of bank runs. The problem that I have with this argument is that, well, in that case, if we completely eliminate the fiction of some kind of private risk management by the banks themselves on the assets and the liability side of its balance sheet by saying work, all of the important liabilities of banks are in fact the federal government's liabilities, then we need to do one of

the two things. One thing would be either we need to make sure that these banks really start acting truly as public utilities on the assets side, on the investment

side of the balance sheets as well. In other words, we need to make sure that they are not able to abuse this kind of public subsidy, public backing, explicit backing of its life of their liabilities to make investments that would generate higher private profits for them but potentially increase the liability for the FDIC that is now direct. Or we need to basically say, well, you know what, we don't really need private banks to intermediate this kind

of money creation, since all the money is public. Let's just provide those accounts publicly and deposit accounts publicly, so that this particular public with just the means of payment, means of exchange will be provided publicly. Everything else, lending, investment services, everything else that does require risk assessment on the ground that is best provided by private firms should be provided by proctors. But we would separate those two functions.

Let me ask you a question, I mean your nomination to head the Office of the Controller of the Currency. The community banks, the regional banks really were vociferous in lobbying against you. And of course, so now the first crisis that we've seen in the current era happens at

a community bank. Like you know, there is some questions setting aside, and I want to get to your thoughts on like FED accounts and all that, but setting aside that, a lot of people over the weekend they're like, well, why shouldn't I just have all my money at Chase? Why shouldn't I just have all my money at City? Because you know, we've been told they're too big to fail. We know they're going to get failed out. Also, just structurally they have they'll have a more diversified depositor base

most likely, so maybe less likely to run. Like, do you see a positive role in the economy for these

community banks that opposed you so much? Well, I do see a very important potential role for community banks to play because community banks just by definition, they are tied to their own communities, right, they are actually the epitome of that image of a private bank being really aware of what businesses and the households and individuals in any particular community really need in terms of financing, right, what kind of businesses they engage in, how responsible they are

in running their financial affairs, whether or not their ideas are deserving of funding. This is the image that basically underlies and informs our existing hybrid system of banking. When we outsource the credit allocation and money creation to local banks, and of course there's huge institutions for three trillion dollars in assets, institutions like JP Morgan Chase, they cannot possibly be held to the same standard of being aware of

what's happening on the ground. So to the extended community, banks are that kind of a bank, we really should promote their existence and support their existence and facilitating existence.

But the problem is structural because it is true that we've made along the way so many policy decisions that effectively reward banks that are large diversified by virtue of conducting businesses and providing financial services that go farther and farther away from the traditional extension of long term loans that they hold on their own banking books into I don't know, investment advisory and investment banking and dealing and trading in various derivatives, instruments and so and so forth.

Because that is the other side of what we call diversification. That's how you diversify away from the traditional lending business. Of course, that diversification has its own risks, but it also, among other things, makes these big diversified institutions effectively too big to fail, because now they have a hand and they play a critical role in so many pockets of

the increasingly complex financial system. So of course it's rational for wholesale depositors to take their deposits out of a smaller community bank or even itsized regional bank and put them into JPMorgan or Bank of America, simply because you know that, for better for worse, these institutions are not likely to fail, and you don't want to think about the safety of your deposits on a going forward basis.

You have too many other things to worry about in your actual business, right, So talk to us a little bit more about what can be done about the mismatch between you know, money as a public good and this private risk taking idea. And specifically, you mentioned the political economy earlier, and we've been talking a little bit about your own experience with politicians. But what can be done

and what is realistic from a political perspective? Well, what is realistic from a political perspective is a very difficult thing to predict right, because politics is fickle, and it's also very difficult to see which political lobbying groups, which political interests are currently pushing forward, and you know how that balance of power is playing out in a moment when everybody is so nervous about potential further fallout from

this particular situation. So living that aside, what can be done right, it's inherently extremely difficult to find the right balance between the public interest in having saved money produced by banks on the one hand, and the banks own quite legitimate interest in being privately profitable on the other hand. Historically, we've had this approach where we try to limit, for example,

the activities and investments of what banks could do. So banks under the Glassdigal Active, and even before that, under the National Banking Act, for example, were explicitly prohibited from

engaging an variety of activities outside the traditional landing. But then, in a long story short, gradually we've allowed these banks, even though they may be limited in what kind of risks they can undertake, to affiliate with securities firms whose business it is to take a lot of risks by trading and dealing in capital markets and derivatives markets, and there's other markets. Basically, their business is to assess and take on various risks that their clients want to take

on or to buy or sell. So, for example, if we want to really sever the kind of private risk creation by virtue of certain types of incentives, certain types of activities that banks undertake and keep their deposit taking money creation function, then we would have to make these banks instead of kind of almost universal diversified financial services providers purely payments providers, providers of this particular public good,

public utility, safe deposit, safe money. We have to limit the kinds of activities they can undertake, We have to limit the kinds of affiliations they can have, so as to limit their incentives to create further risks and to abuse that specific public subsidy. And that of course immediately brings back the ghost of the Glass Degalact. Right, And we know that Glass Degalact was repealed in nineteen ninety nine precisely because it was supposedly stifling competitional, stifling innovation

and all of these things. And we are now in an era where stifling innovation is a really, really bad label and everybody is afraid of being being accused of

stifling innovation. So personally, I just don't see how completely acknowledging explicitly acknowledging that the government is going to stand behind all private deposit liabilities of all private banks, no matter what size and what assets side risk profile may be, on the one hand, without actually, you know, basically poking at that beast of activity limitations and the ghost of glass Tigel, I just don't see how that will happen realistically.

So we sort of teased at this. But one of the things you've written about is this idea of, Okay, if we're going to separate just sort of core checking and deposits from other banking functions, you know, why not have let people have a checking account it the FED.

If that's all it takes. There's no risk there. And you've written about that, and you've advocated that, and it feels like a lot of people are talking about that these days, and people are talking about CBDCs and the difficulty in disbursing unemployment insurance and PPP money during the crisis also revealed some issues the government has in getting money to households. But I think the difference between your

work and a lot of the popular conversation. The popular conversation it feels like kind of like technical, like almost like inspired by crypto, digital currency, etc. And your work and your case feels more explicitly political about changing the balance of power and changing this sort of conduct of banking,

not not just a technocratic central bank fix. Can you talk about the sort of like impulse that you have as sort of like your vision for what the FED would offer, Yes, of course, Well, I believe that all finance is inherently political because we're talking about this public private partnership, right there is that vision of labor between the government that basically has to ensure the safety of all money as we are learning now, and the private

institutions that get to allocate credit. And as we talked earlier, it's extremely difficult to maintain that balance. So it really is a win win situation. We have that fiction that we can basically manipulate technocratically by I don't know, capital regulation and various other tools. Technocratically somehow always fine tune that balance so that the private banks can be profitable, but also in the process of being profitable, they could

generate this public good for us. My idea for the FED accounts is really kind of to imagine the world in which we bite the bullet and say look, instead of constantly trying to keep up with the fast changing environment, where private banks constantly keep pushing on that line right in favor of their private profit making capacity, why don't we just say, look, everybody can open an account deposit

account at the Federal Reserve. Of course, the Federal Reserve then would have to re establish some form of partnership with private institutions, let's call them community banks, right, smaller private institutions that are more likely to adhere to this kind of a public utility model, and have them administer the opening and the management of those accounts on behalf of the FED for all of us, So that, for example,

for me, not much will change. I would still go to my Tompkins Trust, which is a community bank where I bank right, and open my deposit account there, my checking account there. But my checking account would actually have in it the liability not of Tompkins Trust, but the liability director of the Federal Reserve. Now, if I want to have also savings account, or maybe some kind of a money market account, or maybe open a CD for some extra money that will not be provided by the Fed.

Then Tomkins Trust will already have me at the branch right or on the phone, and it would have a great opportunity to tell me, well, by the way, if you want to have an SD or some saving account, here it is we can offer you that particular functionality for a fee, basically the way they do it now. So it will be a great situation for community banks.

They would be effectively the agents of the central Bank for a fee that the Central Bank will pay them manage these kinds of deposit accounts, but also have other services that can deprop that they can provide to everybody like this, and their business model would have been under this situation much more stable than it is now when they're basically at the mercy of depositors thinking, well, you know, I'd rather move my money to JP Morgan Chase because

that is definitely too big to fail institution. So that would have been for us how we would basically deal with it, And yet there would be no need for federal deposit insurance anymore, because the transactional accounts was checking accounts in which we hold our deposit money that we use for payments every day would be explicitly directly the federal government's liability, and the federal government doesn't have an incentive to provide that public good, safe money as some

kind of a private, private profit making opportunity. So that would be the wind win, and we would separate the public money creation from the rest of the private financial and lending activities on the other side, and will not have to deal with all these complicated technical matters of making that regulatory system increasingly complex and increasingly unstable because we keep tinkering on the edges. Tinkering on the edges

is a really good way of putting it. I have a very basic question, and I fully admit I haven't read that much about the whole FED checking account idea, but how do you deposit rates work in that scenario? And how much differentiation would there be between individual banks under that sort of framework. So this is where there is,

of course a range of design choices. And in the paper that I wrote the People's Ledger, my main point was kind of structural, to just imagine when this type of a decision is made, what kind of structural implications it will have, and that it's not as scary as people think because they have this sort of image of all, big bad government is just going to control all of my money and that's bad. And of course that would be a bad thing, but we don't have to design

the system that way. So that was the point of

the paper. But to your question, one of the beauties or potential opportunities that creating this type of a FED account system offers, particularly in the age of CBDC possibilities in other words, that those FED accounts will actually be digital money to okenized money perhaps or account based money, whatever it is, is that then the rates on various deposits can be established in a much more tailored, much more sort of finely managed way, right, depending on a

variety of public policy needs by the FED. So there could be, for instance, interest paid on all of these FED accounts, right, and the ability to pay interest could actually be a very much adirect tool of monetary policy for the FED. Then one might ask a question, should the rates differ for individuals and for companies? Well, they

can if that makes sense. For example, if a particular occurrence or particular dynamic and the economy may necessitate, for instance, to channel molly equidity into a particular sector of the economy by maybe increasing the rate on the deposits that's being paid to a particular type of institutional institutional deposits. That can be done vice versa. If the need is too for example, in the pandemic, to send more money to certain low income families, right, that can be done

much faster and much more easily. And that's one of those flexibility tools that this type of a system would offer. Yeah, it definitely seems like there's potential for an improvement in the transmission of monetary policy, and to the extent that the average deposit holder doesn't even get any extra incentive

in many cases. We just did in an episode about low deposit betas with Joe Botte at Parkleys, and you could imagine a much more sensitive as soon as the Fed hikes rates, you start getting more in your savings account. But that would that would clearly hurt nymbs of private banks across the category. So you could see why even though under your proposal as you envisioned, still a role for big banks, still a role for the community banks as branches, I mean, clearly, it would change their sort

of like funding structure and parts of their profitability. Oh, that's absolutely right, And that is one of the one of the arguments against considering something like FED accounts because people say, well, where where are the banks going to get their funding, because right now they get their funding

from chief deposits. Right, Well, we can actually engineer a similar similar way for private lending institution banks we call them banks now right to get subsidized, publicly subsidized funding for their loans pretty much the way they're getting it even today, right the discount window type of an arrangement where they could actually extend their loans to credit worthy individuals and businesses and turn to the FED and basically discount those loans to the FED at a preferable rate,

at the preferred rate, very good rate of interest. This is basically what the FED has been doing for many decades, and what the FED does every time it sets up this type of liquidity facility that we're seeing set up over the weekend, right when the banks just basically bring their assets and discount those assets, plash those assets to

the FED. And so that can be redesigned as a more permanent solution to the funding needs for those lending institutions that really are interested in lending to the real economy, and it would give the FED capacity to really find you in the credit policy. In other words, the FED wouldn't have to accept at that new discount window, for example, loans to I don't know, short sellers and speculators out

there in capital markets. Not to say that banks cannot then lend to those speculatoris it's just when they lead to those speculators for speculative purposes, they would have to fund those loans in capital markets and leave it to the market discipline to figure out whether one of those

loans are prudent. But if they want to extend loans to a productive enterprise, to small businesses, medium sized business or all large businesses in any community, then they would definitely have access to preferential funding through that kind of a redesigned discount window. In other words, you subsidize on the asset side rather than on the liability side. You know, you mentioned the FED facility just then, which allows banks to tap FED financing on their bonds at par rather

than the market value. Because the whole problem here, or part of the problem, is unrealized losses on things like treasuries and agency mortgage backed securities and things like that. What's the overall impact of that kind of facility on the banking system? How do you see that playing out? Well, this is this facility, of course, is a familiar structure, right.

The FED has done it in the two thousand and eight crisis, in twenty twenty pandemic situations, so to the extent that this is at least the third time we're seeing this type of approach, It is now, in my view, firmly ensconced in everybody's understanding as basically more or less a permanent type of a solution. Right. And the question here is that is it the right thing to do?

Is the the right policy choice? And opinions differ. I do think that in the current situation, as a kind of market wide signal to support all the banks who are being heard by the fed's own monetary policy, it's the right thing to do. But at the same time, it's sort of what does it tell us about this whole conventional image, right of where the public subsidy ends and the private responsibility for the private risk taking begins.

So we are in a situation where now you know, people are asking questions, well, how come banks get this type of liquidity facility. But for example, municipalities, right, or various other more publicly oriented institutions, finance institutions, they don't get something permanent of this kind. And this is where we get into this more complex and deeper issues of

structural change. Right, if the FED really is the only balance sheet in this economy that is already standing to absorb all the risks on various assets, but it makes certain choices, whose risks on what assets is willing to absorb, then this question of what the choice entails and who should be making that choice becomes a political question. You know, it really feels to me just sort of big picture. It really feels to me like the events of SVB

have opened the sort of Overton window a lot. I mean, we're having this conversation you and many other academics, and the CBDC conversation has been going on for a while, but suddenly it feels more mainstream because this tension that you've been talking about for years private profit in banking with this sort of like utility function that everyone expects,

and you did see all these vcs. They're like, well, if we didn't come on, no one really thinks we're lending money to banks and we have a deposit and I think they kind of have a point. Nobody thinks that, and so why do we still pretend that that part of the structure. But it definitely feels like this blew the conversation wide out into the open. So what do

you think like happens now? I mean, like it's hard to predict the future and obviously politics, etc. But like what would you look for and sort of the I don't know coming months in terms of like where this conversation goes, where you expect to see regulatory changes and sort of like how you're what you're watching to see

how it unfolds. I am hopeful that this conversation about finally, you know, cutting that chord right between private deposit taking and the public responsibility for what happens in the crisis actually becomes more of an acceptable measure. But I'm not sure it will simply because you know, rationality of doing something is not the only factor that makes it more likely to happen. There are a lot of vested interests, economic and political interests that will be fighting tooth and

nail against it. The banking industry, for one, right, So my worry is that yes, yeah, I just as a tag on you know, very minor. I would love to have you back on another time to talk about that whole experience of the failed nomination. But you know, just the political the vehemence of the opposition to you curious like you saw firsthand how powerful that community bank lobby is.

That's absolutely right. They're very powerful, and unfortunately they're too easily manipulated by the Wall Street big bank lobby in my view, because the real fear, from my views, you know, separate the public from private. The real fear was really coming from the big banks because they are the ones who run a lot of risk and take on a lot of risks and generate a lot of risk for all of us on the asset side of their balance sheets.

And they knew that people who like me advocate for sort of you know, the return to more kind of public utility type banking or two more public role in banking sector in general, would not really hear the point of view really well. But the community banks are extremely powerful and they played the role unfortunately in that process.

Sally Omarova so much, thanks for coming on. I feel like it is the perfect guest for real to like move this conversation forward someone who's been thinking about these for a lot longer than a week and a half, like many other people have. Great to get your perspective. Thank you so much. Yeah, thank you so much, Sally. That was really interesting. From discount window to overton window. Has anyone made that joke yet? Oh? That's a that's

a good one. It does feel tracy like this sort of like glaring contradiction of like, look, we all just want a checking account, We just want to have a place to put our money and not have to think about it. And then the fact that once in a while our checking account holders blow up and they got the profits or whatever, like, it does feel like it's getting harder and harder to accept that that can't be resolved. Right if it all comes back to the FED eventually,

then why not just go straight there? But I also thought Sally's point about tinkering at the edges of bank regulation was really accurate, because it does feel like it's not just that, it's also that the very nature of regulation tends to be quite backward looking, and so we're always fighting the last crisis, and so the result of two thousand and eight was well, we have a lot of new capital and liquidity rules that mandate banks hold big buffers of bonds, and now that you know, that

was fine during a period of relatively low inflation, but fast forward to today, there's lots of inflation, and now those bonds are somewhat problematic, and now we're having to scramble to think of new things. When to her point, you could just kind of maybe try to strike at

the heart of it. But that said that said, I do think political constraints are real, and I cannot even begin to imagine what this process, I mean, you're talking about serious structural reform banking would actually look like No, that's true. You know, it's funny you said, like how much like regulator it's always like fight the last War, And it is so wild that like a the real like sort of like panic was really on the depositor side, which is not something we thought about in two thousand

and eight, when it was really about the assets. And then the assets that they did have, I mean it was like treasuries and MBIs, which they did take a

big rate hit on. But it's like going back to like two thousand and eight, it's like, oh cool that, you know, we never I don't think people conceived of that is like where the location of like a big blow up would have happened, because it wasn't like they were like making really agregious loans to or like you know, really exotic, non good I mean the irony is they took money for risky startups and put it into really safe No, it's it really inverts everything, right, Like I

was trying to think about, like it has there ever been another financial crisis or sort of banking bank that failed because they took money from risky entities and lent it to safe ones, Like it really does invert our conception of how these crises happen. Absolutely, But maybe you know, as we were discussing, maybe that's the peg that's needed to really start to think about some of these underlying issues. Because if even that is a problem, then then it

seems like we need to start looking for an alternative solution. Yeah. Absolutely, all right, shall we leave it there? Let's leave it there. This has been another episode of the Odd Thoughts podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway, and I'm Joe Wi isn't all. You can follow me on Twitter at the Stalwart, follow our guest sal Amarova, She's at st Amarova. Follow our producers Carmen

Rodriguez at Kerman Arman and Dash Bennett at Dashbot. And check out all of Bloomberg's podcasts under the handle at podcasts. And for more odd Lots content, go to bloomberg dot com slash odd Lots, where we post transcripts. Tracy and I have a blog, and we have a newsletter that comes out every Friday. Go there and sign up. Thanks for listening,