This is the Libertarian Podcast from the Hoover Institution.

I'm your host Tom Church and I'm joined as always by the Libertarian Professor Richard Epstein.

Richard is the Peter and Kirsten Bedford senior fellow here at the Hoover Institution.

He's the Lawrence A Tis Professor of Law at NYU and is a senior lecturer at the University of Chicago.

And Richard, it's been an eventful week here in Silicon Valley, home of Stanford University, the Hoover Institution, and formerly Silicon Valley Bank. That's because we're one week past the second largest bank failure in US history.

Now, late last week, Silicon Valley Bank started to fold.

It went very, very quickly.

And over the weekend, theC to Treasury Department the federal government

had to step in to ensure that a wider bank run wouldn't occur and Richard I'm hoping

before we get into a lot of the political responses, you could maybe walk us through what happened with S. V.

And then later, Signature Bank, and then the actions at the FDAC and the Treasury Department had to had to do over the weekend to step in to make sure that that depositors would be made whole.

Yes, well, I mean they had to do is going to be a disputed point, but I think the best way to try to do this is to sort of go back and explain why it is that banking is such a perilous business.

And it's a technical point, but it's one which seems to be absolutely immovable. And it's the problem of the mismatch maturity. So what you do as a bank is essentially you're in the middle of a two-sided market.

And on the deposit side, the people who put their money in are typically putting in paychecks or other kinds of periodic payments.

And the only way in which they can survive is to have a right to immediate access to all the funds that they put in there at will.

It would be utterly impossible for you to say to put in your $10,000 a month paycheck.

And then when you want to take it out, the banks

says, are you going to use this to paycheck,

to pay rent or something else?

No, you just want to be able to take it out,

no questions asked, so long as the balance is available. So what happens is the bank has to keep a certain amount of cash liquid.

Then what you do is you turn around and you have the money and in order to make money, what you have to do is you have to be able to lend it out at a

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