"What We Do in the Shadows."Disney Media Distribution
Is it Friday yet?Dan DeFrancesco in NYC. What a week it's been already for Wall Street. Fortunately, it seems like things are finally starting to calm down.
However, SVB's relationship with the tech community wasn't just about being a place for them to park their cash. Arguably its greatest service to startups was as a lender.
New companies, especially ones that don't make any money are "pre-revenue," as VCs like to say, aren't easy to lend to. How do you underwrite a loan for a company that didn't exist six months ago? What's the credit worthiness of a business that hasn't produced a product yet?
What's interesting about this group is they operate outside the guardrails of traditional lending. These so-called "shadow bankers" are much less transparent than their big-bank counterparts.
And while there are benefits to their discreetness — would you like everyone to know when you take out a loan? — there are also risks to letting investment firms lend billions of dollars without much oversight.
So we have investment firms lending billions of dollars to mostly unprofitable startups in a shroud of darkness.
What could possibly go wrong?
Call me paranoid. Call me pessimistic. Call me a socialist. Something just doesn't sit well with me about private-credit firms picking up where SVB left off. Do we honestly think this will end well?
But maybe that's the point. SVB got into trouble because it didn't rule with an iron fist. And perhaps private-credit firms will provide the tough love the industry needs.
Whatever happens, just don't ask for another bailout.
3. Wall Street weighs in on SVB. Citadel's Ken Griffin said letting SVB fail without a bailout would have been "a great lesson in moral hazard," but instead US capitalism is "breaking down before our eyes." Meanwhile, Bridgewater Associates founder Ray Dalio said the bank's failure was a "canary in the coal mine" moment for the financial world.
5. Robots for the rich! Morgan Stanley wants to use an OpenAI-powered chatbot to help its 16,000 financial advisors, CNBC reported. The chatbot is built on GPT-4, which is the latest iteration of the AI model that was just unveiled. More on the newest tech that can "pass a bar exam and score a 5 on several AP exams."
8. Everything you need to know about that weight-loss drug people keep talking about. Ozempic, which is traditionally used for diabetes treatment, is also helping people shed pounds. More on the buzzy drug here.
9. Are penis-enlargement implants the new breast implants? Yes, you read that correctly. A urologist wants to make his procedure the new norm, but it comes with risks. If you're interested in learning more about how men are *ahem* upgrading their member, click here for more.
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