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> All financial crises are runs on deposits?

Interesting question. I'm thinking he means more than just folks withdrawing their cash at the teller when he says "run". I found this:

https://johnhcochrane.blogspot.com/2014/04/toward-run-free-f...

"At its core, our financial crisis was a systemic run. The run started in the shadow banking system of overnight repurchase agreements, asset-backed securities, broker-dealer relationships, and investment banks. Arguably, it was about to spread to the large commercial banks when the Treasury Department and the Federal Reserve Board stepped in with a blanket debt guarantee and TARP (Troubled Asset Relief Program) recapitalization. But the basic economic structure of our financial crisis was the same as that of the panics and runs on demand deposits that we have seen many times before.

"The run defines the event as a crisis. People lost a lot of money in the 2000 tech stock bust. But there was no run, there was no crisis, and only a mild recession. Our financial system and economy could easily have handled the decline in home values and mortgage-backed security (MBS) values—which might also have been a lot smaller—had there not been a run.




> At its core, our financial crisis was a systemic run. The run started in the shadow banking system of overnight repurchase agreements, asset-backed securities, broker-dealer relationships, and investment banks.

Note how none of these things are consumer deposits. Fintech and shadow banking are two names for the same thing, and the same risk of runs and need for regulation applies.


Shadow banking isn’t fintech. It’s non-bank lenders like hedge funds.


I should've said fintech is a subset of shadow banking, because not all shadow banks are tech-oriented. But a fintech company is more-or-less by definition a non-bank doing bank-like things, which is the definition of a shadow bank.


FinTech is more than that though. Fintech is also advanced analytics for helping banks price derivatives. And for auto-pricing real estate.


Derivatives pricing and real estate pricing were major causal factors in the last financial crisis. A lot of the banking regulations regarding reporting, data integrity etc. are if anything even more important when the data analysis is being done by a separate entity from the one that's performing the transactions.


The run he's describing there is fundamentally the same as a run on retail banks. Retail banks in the US are pretty much run-proof due to the FDIC, but that's not the case for the shadow banking system.




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