[Week 31, 2025] Delegates and Drivers

Welcome back to Price and Prejudice with a few musings from Week 31 of 2025.

Banks as Delegators

'A friend of mine at The Economist wrote a nice piece about the slow-motion transformation of banking. The gist: banks used to lend money directly to households and businesses; now they mostly don’t. Instead, they originate loans, slice them up, sell them off, and buy securitized versions back. This is a classic example of how whenever there’s demand for something—say, loans—and the usual suppliers are constrained, someone else steps in. As the article points out, this is not new: the share of private lending directly on bank balance sheets peaked in the 1970s and has been shrinking ever since.

Is this a problem? One could argue that the job as a regulator became more onerous as a result. Instead of keeping tabs on a few hundred banks, now they have to monitor a sprawling ecosystem of shadow lenders, ETFs, CLOs, and whatever fintech startup is marketing loans on TikTok. But the irony is that banks themselves are probably safer: they keep the senior tranches, offload the risky stuff, and let hedge funds and insurers take the hits. So yes, the system is harder to police, but also harder to break.

The Billionaire Path

In college, a friend once told me his dream was to be a billionaire before 40. He said there were two ways to get there: 1) start a company, scale it, and eventually sell to someone bigger; or 2) start a hedge fund, leverage other people’s money, and hope you’re better at finance than everyone else. He picked option two and is now a fixed-income portfolio manager in New York. (Not a billionaire yet, but very familiar with yield curves.)

This piece on the recent Figma IPO suggests a third route: join the right startup early, stick around, and let the public markets do the heavy lifting. It’s less exhilarating than building your own empire and less stressful than betting other people’s pensions, but if the company takes off, you quietly end up fantastically rich. The only real drawback is that you don’t get the founder-glory or the hedge-fund-maverick mystique. But if the goal is simply a billion dollars, maybe the “how” matters less than the commas in your brokerage account.

Driverless Dollars

Aurora, a self-driving company, just logged its first million in revenue from driverless trucking. The company now runs three autonomous trucks between Dallas and Houston, promising more by year-end. One looming question is liability: if a driverless truck crashes, who pays? The recent Tesla verdict in Florida—$243 million for an Autopilot-related crash—shows how expensive that answer could be. But if juries are willing to punish Tesla even when drivers admit to looking at their phones, it’s not hard to imagine Aurora getting hit with similar claims when one of its 40-ton robots makes a mistake.

There’s also a cultural question: how much of the American economy quietly depends on long-haul truckers being human? Gas stations, motels, diners, roadside attractions—entire business models exist because men in trucks get tired, hungry, and bored. The productivity gains might be real, but so will the ripple effects. We’ve spent a century building an economy around truck stops; it’s not obvious what happens when the trucks don’t stop.