Question A:
Financial regulators in the US and Europe lack the tools and authority to deter runs on banks by uninsured depositors.
Responses
Responses weighted by each expert's confidence
Question B:
Not guaranteeing uninsured deposits at Silicon Valley Bank in full would have created substantial damage to the US economy.
Responses
Responses weighted by each expert's confidence
Question C:
Fully guaranteeing uninsured deposits at Silicon Valley Bank substantially increases banks’ incentives to engage in excessive risk-taking.
Responses
Responses weighted by each expert's confidence
Question A Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
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 Daron Acemoglu |
MIT | Bio/Vote History | ||
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Deposit insurance is not enough for uninsured depositors. But there are many other tools available within the current regulatory system. The details matter.
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 Joseph Altonji |
Yale | Did Not Answer | Bio/Vote History | |
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 Alan Auerbach |
Berkeley | Bio/Vote History | ||
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 David Autor |
MIT | Bio/Vote History | ||
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 Abhijit Banerjee |
MIT | Bio/Vote History | ||
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 Marianne Bertrand |
Chicago | Bio/Vote History | ||
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 Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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Promo corrective action allows regulators to close bank. Extending guarantees requires support of Finance ministry and central bank.
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 Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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 Judith Chevalier |
Yale | Bio/Vote History | ||
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 David Cutler |
Harvard | Bio/Vote History | ||
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 Angus Deaton |
Princeton | Bio/Vote History | ||
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 Darrell Duffie |
Stanford | Bio/Vote History | ||
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Regulators have the ability to Impose much stronger capital and liquidity requirements.
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 Aaron Edlin |
Berkeley | Did Not Answer | Bio/Vote History | |
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 Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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The have tools and authority. They also have side effects.
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 Liran Einav |
Stanford | Bio/Vote History | ||
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 Ray Fair |
Yale | Bio/Vote History | ||
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 Amy Finkelstein |
MIT | Did Not Answer | Bio/Vote History | |
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 Pinelopi Goldberg |
Yale | Bio/Vote History | ||
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 Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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 Robert Hall |
Stanford | Bio/Vote History | ||
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If regulators acted to maintain capital at banks, there would be no runs bu uninsured depositors
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 Oliver Hart |
Harvard | Bio/Vote History | ||
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To the extent that the FDIC and similar bodies can announce that they will protect uninsured depositors, as they did in the case of SVB, I think they have the tools. Whether they should do this is another matter.
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 Bengt Holmström |
MIT | Bio/Vote History | ||
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For now they have the tools, but system needs repair. More attention to variety of deposits and liabilities. More decentralized backstops should be investigated.
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 Caroline Hoxby |
Stanford | Did Not Answer | Bio/Vote History | |
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 Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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 Kenneth Judd |
Stanford | Bio/Vote History | ||
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 Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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 Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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Announcing after one starts that everything will be backed does not count in my view.
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 Pete Klenow |
Stanford | Bio/Vote History | ||
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 Jonathan Levin |
Stanford | Bio/Vote History | ||
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 Eric Maskin |
Harvard | Bio/Vote History | ||
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Guaranteeing deposits at SVB and Signature Bank does seem to have successfully deterred runs at other banks.
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 William Nordhaus |
Yale | Bio/Vote History | ||
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 Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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 Emmanuel Saez |
Berkeley | Did Not Answer | Bio/Vote History | |
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 Larry Samuelson |
Yale | Bio/Vote History | ||
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There is ample room for regulators to more assiduously apply the tools they have, and the creative use of these tools has often been effective. Of course some more powerful tools would sometimes be useful.
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 José Scheinkman |
Columbia University | Bio/Vote History | ||
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However SVB problem was not a run driven by expectations but the failure of bank regulators to take action after identifying risk-management failures
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 Richard Schmalensee |
MIT | Bio/Vote History | ||
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 Carl Shapiro |
Berkeley | Bio/Vote History | ||
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 Robert Shimer |
University of Chicago | Bio/Vote History | ||
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Legally, yes, though they seem willing to offer insurance to uninsured depositors.
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 James Stock |
Harvard | Bio/Vote History | ||
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 Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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 Christopher Udry |
Northwestern | Did Not Answer | Bio/Vote History | |
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Question B Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
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Daron Acemoglu |
MIT | Bio/Vote History | ||
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If problem is a run on other banks, then their uninsured depositors should have been insured (e.g., SVB depositors lose money but for the next year, depositors of other banks are fully insured). Instead, authorities bailed out the millionaire depositors of SVB. No logic to this
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Joseph Altonji |
Yale | Did Not Answer | Bio/Vote History | |
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Alan Auerbach |
Berkeley | Bio/Vote History | ||
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David Autor |
MIT | Bio/Vote History | ||
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Abhijit Banerjee |
MIT | Bio/Vote History | ||
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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Many regional banks would have lost their cheap deposit funding and with it a large part of their franchise value.
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Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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Judith Chevalier |
Yale | Bio/Vote History | ||
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Taken literally, the statement suggests that there is no X<100 such that an orderly process guaranteeing depositors X cents on the dollar wouldn't have caused substantial damage. That seems unlikely.
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David Cutler |
Harvard | Bio/Vote History | ||
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Angus Deaton |
Princeton | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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Contagious run risk would be invited without those moves. The deposit guarantees caused a lot of unfortunate moral hazard, but the alternative was too systemically risky.
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Aaron Edlin |
Berkeley | Did Not Answer | Bio/Vote History | |
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Despite discomfort with the outcome, I am inclined to agree. There would have been runs on other small and medium-sized banks with significant amounts of uninsured deposits, with damaging economic effects.
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Amy Finkelstein |
MIT | Did Not Answer | Bio/Vote History | |
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Pinelopi Goldberg |
Yale | Bio/Vote History | ||
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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how easy is it to substitute to a new bank or to alternative credit sources? for marginal credit shocks it seems like they are relatively substitutable. for non-marginal ones (SVB?), i think we know less but it isn't hard to tell a scary story.
-see background information here |
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Robert Hall |
Stanford | Bio/Vote History | ||
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Some experts think uninsured depositors would ultimately receive full value from reorganization of SVB.
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Oliver Hart |
Harvard | Bio/Vote History | ||
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The FDIC could have said that SVB depositors will have a haircut but depositors at other banks will not. This would have prevented runs at other banks.
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Bengt Holmström |
MIT | Bio/Vote History | ||
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The speed and scope of contagion was scary
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Caroline Hoxby |
Stanford | Did Not Answer | Bio/Vote History | |
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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Kenneth Judd |
Stanford | Bio/Vote History | ||
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There was no reason for damage but fear is not rational. If a panic leads to a run then no bank is safe.
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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With the guarantee, we have seen some damage. Without the guarantee, the run likely would have spread to many other banks.
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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There would have been other runs if they let SVB go; the uninsured people would gotten about 90 cents on the dollar. Letting the first couple fail and take losses and then enacting a guarantee was an option. Also selling to one of the mega banks was an option. We'll never know
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Pete Klenow |
Stanford | Bio/Vote History | ||
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Jonathan Levin |
Stanford | Bio/Vote History | ||
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Eric Maskin |
Harvard | Bio/Vote History | ||
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Making point predictions (e.g., "there will be substantial damage") is hard, but there appeared to be at least considerable RISK of substantial damage----which was the rationale for the guarantees
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William Nordhaus |
Yale | Bio/Vote History | ||
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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Emmanuel Saez |
Berkeley | Did Not Answer | Bio/Vote History | |
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Larry Samuelson |
Yale | Bio/Vote History | ||
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The counterfactuals are too speculative to be certain.
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José Scheinkman |
Columbia University | Bio/Vote History | ||
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If to avoid substantial damage to economy, govt. must make-up for the. action of a CFO that deposited 1 billion+ in a single midsized bank, then we should rethink the whole banking system.
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Richard Schmalensee |
MIT | Bio/Vote History | ||
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Not a sure thing, but the probability was high enough to justify insuring all deposits.
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Carl Shapiro |
Berkeley | Bio/Vote History | ||
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
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It would have reduced growth, at least in the tech sector, but that was the objective of monetary policy prior to SVB
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James Stock |
Harvard | Bio/Vote History | ||
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Hard to be sure about the counterfactual but there appeared to be a real risk of contagion based on publicly available information in real time.
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Christopher Udry |
Northwestern | Did Not Answer | Bio/Vote History | |
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Question C Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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Daron Acemoglu |
MIT | Bio/Vote History | ||
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How could it be otherwise?
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Joseph Altonji |
Yale | Did Not Answer | Bio/Vote History | |
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Alan Auerbach |
Berkeley | Bio/Vote History | ||
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David Autor |
MIT | Bio/Vote History | ||
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Abhijit Banerjee |
MIT | Bio/Vote History | ||
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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It depends what safe guards one put in place.
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Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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Judith Chevalier |
Yale | Bio/Vote History | ||
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The extent of the implicit promise now seems quite uncertain.
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David Cutler |
Harvard | Bio/Vote History | ||
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Angus Deaton |
Princeton | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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Yes, if unaccompanied by heightened capital requirements.
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Aaron Edlin |
Berkeley | Did Not Answer | Bio/Vote History | |
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Despite the SVB guarantee, other banks with uninsured deposits are still seeing significant deposit withdrawals when they take excessive risks and otherwise make imprudent management decisions. They are still subject to an element of creditor discipline. See First Republic...
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Amy Finkelstein |
MIT | Did Not Answer | Bio/Vote History | |
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Pinelopi Goldberg |
Yale | Bio/Vote History | ||
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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see below link--- what could possibly go wrong?
-see background information here |
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Robert Hall |
Stanford | Bio/Vote History | ||
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Oliver Hart |
Harvard | Bio/Vote History | ||
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This is a concern. At the same time senior management at SVB were removed and this will deter future risky behavior.
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Bengt Holmström |
MIT | Bio/Vote History | ||
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A more decentralized system might provide better deterrents, alleviating the moral hazard.
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Caroline Hoxby |
Stanford | Did Not Answer | Bio/Vote History | |
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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Kenneth Judd |
Stanford | Bio/Vote History | ||
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Heads they win. Tails I lose. This is one game they are experts at playing.
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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There is going to have to be another recalibration of regulation given this bailout.
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Pete Klenow |
Stanford | Bio/Vote History | ||
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Jonathan Levin |
Stanford | Bio/Vote History | ||
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It seems very early to predict how banks' future incentives will change as a result of the current crisis.
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Eric Maskin |
Harvard | Bio/Vote History | ||
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This is the classic moral hazard problem associated with insurance
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William Nordhaus |
Yale | Bio/Vote History | ||
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Depends upon the followup policy
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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Emmanuel Saez |
Berkeley | Did Not Answer | Bio/Vote History | |
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Larry Samuelson |
Yale | Bio/Vote History | ||
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We cannot expect the financial system to work if all downside risk is removed.
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José Scheinkman |
Columbia University | Bio/Vote History | ||
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and the incentive to corporate CFOs to concentrate deposits in ``friendly'' banks.
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Richard Schmalensee |
MIT | Bio/Vote History | ||
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Bankers lost their jobs and shareholders lost their money even with full insurance.
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Carl Shapiro |
Berkeley | Bio/Vote History | ||
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
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If we could not address moral hazard at banks now, then when can we address it?
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James Stock |
Harvard | Bio/Vote History | ||
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One thing we learned is that the very sophisticated depositors (VCs behind the companies) didn't provide the oversight that would have deterred SVBs investments. So the diligent depositor providing oversight isn't compelling.
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Assuming they claw back bonuses, banks have little incentive to get wiped out.
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Christopher Udry |
Northwestern | Did Not Answer | Bio/Vote History | |
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