Secure your future with Silicon Valley Bank, open an account today!

By Jason Li STAFF WRITER

Less than two months ago, Silicon Valley Bank (SVB) was only known to a niche group of individuals in California. Fast forward to today, and it has gained an international reputation as a paragon for which we chastise the banking industry and our own government.

Founded in 1983, SVB has long been considered an engine for the innovation economy. The bank provided money to startups and emerging technology companies in the hopes they would grow and pay back the loans. This lending practice was extremely rewarding but risky, as these companies had a high chance of failing and defaulting on their payments. Soon, SVB started losing the confidence of its investors and clients.

These concerns were further amplified by the pandemic, as the contraction of the economy significantly affected SVB’s customer base of startups and emerging tech companies. Companies collectively struggled, leaving the bank to deal with significant losses and a reduced ability to provide more loans. As a result, the bank’s financial position became increasingly risky.

This eventually boiled over

By GL Sacco STAFF

Disruptive technologies have impacted our lives in innumerable ways. Electric cars, virtual reality, 5G and numerous other genius human accomplishments have changed the way we live. But, the latest breakthrough in tech is artificial intelligence (AI).

As a student, I see how it impacts both students’ ability to complete their schoolwork and professors’ teaching styles. However, with this added ease for students comes an added pressure for professors.

Hours of lecturing can now be replaced with a simple prompt and some elementary follow up questions. I’ve witnessed first-hand teachers make learning content we can’t get from AI their top priority in a class. It makes sense. What is the purpose of going through the entire college process just to have a computer do the exact same thing in significantly less time?

Making sure there is a distinction between the capabilities of humans and those of AI should be a top priority — otherwise, our day to day lives would seem merely superficial. But as AI constantly increases its own capabilities, this becomes a seemingly impossible task.

The generative AI chatbot known as ChatGPT has taken college campuses by storm. Now, the popularity and power of ChatGPT have led to an AI arms race with major tech firms such as Google and Microsoft squaring o at the top.

The speed at which new technolo- on March 10, as SVB clients were making a run on the bank.

Depositors were scrambling to withdraw their money, which ultimately totaled an amount the bank couldn’t provide. The bank’s stock crashed by 60.41%, trading was halted and banking regulators in California decided to close the bank.

Because SVB was deemed “too big to fail,” the government had to intervene and give SVB financial backing. They gave the bank a credit loan so they could continue lending to customers.

This was considered a necessary action to save the bank from failing and sparking a crisis in the banking sector. But, the whole scenario just emphasizes the more severe problem we have been dealing with since the 2008 financial crisis.

Back in 2008, the entire banking industry was on the verge of collapse. The sector was experiencing multiple bank runs, as reckless lending practices and a lack of regulation led to decreased confidence from clients. To stop the wider economy from collapsing with it, the government rescued the failing banks by bailing them out with national funding. While it might have been necessary at the time, banks soon realized they can force the government to contin- ue bailing out riskier institutions that are in trouble.

Although vital, rescuing these failing banks feeds into a moral hazard. The banks become aware that they can count on the authorities to bail them out of trouble, so they become more willing to engage in risky behavior. Put simply, they realize they won’t have to pay for their actions since the U.S. government will — with taxpayer money.

Bailing out failing banks also releases them from responsibility. These banks are not required to alter their behavior or accept accountability for their actions. Because of this, the same issues keep arising — increasing volatility and danger within the banking sector.

More stringent banking laws are needed, as they support the sustainability required to address this issue. Banks should conduct their business safely and responsibly, without taking on too much risk or relying on predatory lending techniques. They also must be able to answer for their deeds and bear the consequences of their choices. Increased capital requirements for banks would be a strategy to persuade them to act more responsibly. If these institutions had the financial resources to absorb losses without help from the government, they would be less likely to take risks. If we toughen the penal- ties for banks that violate regulations, a culture of responsibility that ensures bank accountability can be established within the sector. gies are being released is remarkable. This innovation is fueled by competition and, of course, money. However, AI may be a disruptive technology — one we might not want gaining power too quickly. For all of the good that comes out of AI, it’s also important to be mindful of the dangers that can come from it. Unlike electric cars, virtual reality and 5G, AI has the capability to act in human-like ways, reeling in a whole new list of issues.

So, should you open a bank account with Silicon Valley Bank? That decision ultimately boils down to whether or not you trust the U.S. government’s ability to make its credit payments.

If so, opening a savings account with SVB is practically risk-free because it is Federal Deposit Insurance Corporation (FDIC) insured, meaning depositors will be protected by up to $250,000 in the case of a bank failure. The decision to create an account with SVB, however, becomes pointless if you don’t believe the government will be able to pay its debts on time. All scenarios would result in the eventual collapse of the whole financial system, making all savings and deposits — regardless of the financial institution — meaningless.

So for your sake and mine, let’s give SVB a second chance.

Jason Li is a sophomore studying Finance, Investment and Banking at UW-Madison. Do you trust the U.S. government’s ability to make its credit payments? Let us know at opinion@dailycardinal.com.

Earlier this year, AI engines from Google and Microsoft passed the “Turing test.” The Turing test is administered by a human on an AI engine. If the interrogator is unable to distinguish the AI responses from the human responses, then AI has passed the test.

Most of these questions are not centered around high-level intelligence but rather on language cues and elementary level problem solving. Before the development of these chatbots, passing the Turing test was a rarity, to say the least. Now, it seems ever more common.

This accelerated development of AI being indistinguishable from humans is dangerous. For example, AI can now engage in manipulation and initiate a task as simple as a common scam. This isn’t to say we have reached “The Terminator” levels, where the human race could be at risk, but it is certainly important to monitor as the capabilities of AI increase.

Additionally, equipping bad actors with this kind of AI could have catastrophic impacts throughout the world. As a result, AI experts and global tech leaders such as Elon Musk recently called for a pause in the development of this powerful technology.

In an interview with Yoshua Bengio, often referred to as the “Godfather of AI,” Musk said, “We’ve reached the point where these systems are smart enough that they can be used in ways that are dangerous for society.” This consensus among tech leaders is not a call to action to stop AI development, but rather to understand how to control the AI that is developed before it is further developed.

Ensuring we can control AI before rushing to expand it seems like common sense; however, as history heeds, greed often takes control of people when they stumble upon an opportunity as lucrative as AI could be. To simply hope every AI specialist across the world will slow down for the purpose of safety is not something to bet on.

So, next time ChatGPT is doing your math homework or writing your

10 page essay for your class, keep in mind the consequences of this intelligence as well as its benefits. AI could be the answer to humans’ most complex problems or the downfall of all our previous accomplishments.

GianlucaSaccoisasophomoreat UW-Madison studying Economics and Political Science. Do you agree that Artificial Intelligence requires increased vigilance? Send all commentstoopinion@dailycardinal.com