Banking Crises Are Preventable, But Human Nature Gets in the Way
From 1300s Venice to 2023 Silicon Valley, financial panics arise from an endless cycle of complacency, risk-taking and fear.
Illustration: Nick Little for Bloomberg Businessweek
One of Jamie Dimon’s daughters called him up from school with a question more than a decade ago: “Dad, what’s a financial crisis?” The billionaire who runs JPMorgan Chase & Co. tried to put her at ease. “It’s the type of thing that happens every five to seven years,” he told her, he later testified to the Financial Crisis Inquiry Commission. She asked him on the phone why people seemed so surprised by the calamity. In Washington, when he told this story, he said we shouldn’t be.
That’s because the history of banking is, at least in part, a kind of horror story that keeps repeating itself.