Financial panics are nothing new. But the strange little panic we’re enduring—one that started last week with a massive bank run causing the collapse of Silicon Valley Bank and that continued this morning with big sell-offs in the stocks of other regional banks—is arguably the first one in which social media, and particularly Twitter, has been a major player. And if the past few days are any indication, that does not bode well for the next major financial crisis.
Twitter has featured a useful flow of facts and analysis from informed observers and participants on subjects including SVB’s balance sheet, the failures of bank regulation, and the pros and cons of bailing out depositors. But users have also been subjected to a flood of dubious rumors and hysterical predictions of new bank runs. Federal regulators worked assiduously over the weekend to come up with a plan that would forestall contagion and reassure depositors that their money was safe. But on Twitter, chaos loomed.
The most notorious tweets of the past few days came from Silicon Valley venture capitalists, investors, and company executives, who were desperate for the government to guarantee that no SVB depositor would lose any money (even though most of SVB’s deposits were not FDIC-insured). Their rhetorical strategy of choice was to insist that unless SVB’s depositors were made immediately whole, the entire tech industry and every non-megabank in America would be at risk.
Specifically, they said we were facing...
A serious legal fight has now started, and it is pulling big names into the spotlight. Brian Harpole, who once handled security for Charlie Kirk, has filed a defamation lawsuit against Candace Owe...