Hedge funds are notorious for making big and sometimes risky trades. Banks, meanwhile, are supposed to be a lot more boring by comparison — for obvious reasons. But in recent years, we've seen banks like Silicon Valley Bank make some pretty bad bets themselves. Elham Saeidinezhad, an assistant economics professor at Barnard College, Columbia University, argues that banks have been turning into giant "synthetic hedge funds" by blending traditional lending activities with advanced financial strategies. The big question, of course, is whether they should be doing this at all, given that banks typically operate with a lot more regulatory constraint and might not be as nimble when it comes to entering or exiting positions.

Read more:
SVB’s 44-Hour Collapse Was Rooted in Treasury Bets During Pandemic
SVB Failure Sparks Blame Game Over Trump-Era Regulatory Rule
The Thorny Question of Why We Treat Banks Differently At All?

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Hedge funds are notorious for making big and sometimes risky trades. Banks, meanwhile, are supposed to be a lot more boring by comparison &mdash; for obvious reasons. But in recent years, we've seen banks like Silicon Valley Bank make some pretty bad bets themselves. Elham Saeidinezhad, an assistant economics professor at Barnard College, Columbia University, argues that banks have been turning into giant "synthetic hedge funds" by blending traditional lending activities with advanced financial strategies. The big question, of course, is whether they should be doing this at all, given that banks typically operate with a lot more regulatory constraint and might not be as nimble when it comes to entering or exiting positions.
Read more: <a href="https://www.bloomberg.com/news/articles/2023-03-10/svb-spectacularly-fails-after-unthinkable-heresy-becomes-reality?utm_medium=referral&amp;utm_source=podcast&amp;utm_campaign=odd_lots&amp;utm_content=article" data-testid="link-with-safety" data-renderer-mark="true">SVB&rsquo;s 44-Hour Collapse Was Rooted in Treasury Bets During Pandemic</a> <a href="https://www.bloomberg.com/news/articles/2023-03-13/svb-failure-sparks-blame-game-over-trump-era-regulatory-rollback?sref=frV97TwV?utm_medium=referral&amp;utm_source=podcast&amp;utm_campaign=odd_lots&amp;utm_content=article" data-testid="link-with-safety" data-renderer-mark="true">SVB Failure Sparks Blame Game Over Trump-Era Regulatory Rule</a> <a href="https://www.bloomberg.com/news/articles/2024-03-04/the-thorny-question-of-why-we-treat-banks-differently-at-all?sref=frV97TwV?utm_medium=referral&amp;utm_source=podcast&amp;utm_campaign=odd_lots&amp;utm_content=article" data-testid="link-with-safety" data-renderer-mark="true">The Thorny Question of Why We Treat Banks Differently At All?</a>
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Bloomberg's Joe Weisenthal and Tracy Alloway explore the most interesting topics in finance, markets and economics. Join the conversation every Monday and Thursday.

Bloomberg's Joe Weisenthal and Tracy Alloway explore the most interesting topics in finance, markets and economics. Join the conversation every Monday and Thursday.

Bloomberg's Joe Weisenthal and Tracy Alloway analyze the weird patterns, the complex issues and the newest market crazes. Join the conversation every Tuesday and Thursday for interviews with the most interesting minds in finance, economics and markets.

Odd Lots

On Bloomberg’s Odd Lots podcast Joe Weisenthal and Tracy Alloway explore the most interesting topics in finance, markets, and economics. Join the conversation every Monday and Thursday. 

On Bloomberg’s Odd Lots podcast Joe Weisenthal and Tracy Alloway explore the most interesting topics in finance, markets, and economics. Join the conversation every Monday and Thursday.

How Banks Turned Into Giant Synthetic Hedge Funds

https://api.omny.fm/orgs/e73c998e-6e60-432f-8610-ae210140c5b1/clips/26b00417-6c8d-40af-a016-b28a01330147/transcript

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