141–150 of 201 posts
Ahh, the schadenfreude. I'm rubbing my hands together in glee at the thought of these parasites getting what's coming to them.
There are hard tradeoffs here, and one failed bank doesn't mean the wrong choice was made. As I remember it, the reason for weakening these regulations was that Dodd-Frank is/was extremely expensive to comply with, and that created a banking sector where only the biggest banks could survive and it made no sense to start any new banks.
I conducted Dodd-Frank Act Stress Tests for one component of a large bank. For a $400B portfolio I was able to do it with a team of 4 people including myself plus a $100k/year license to Barra and it takes about a week of the whole team’s focus. The thing is, we were already employed by the bank to run risk management and the bank already had the subscription to the software. So from the bank’s perspective it was clo…
This feels so damn true about almost every megacorp belly-aching about regulation.
Earlier quoted context omitted.
The tech sector has made themselves one of the most hated groups in the country, behind Congress, telecom providers, and the media. Doubt they're going to find much sympathy from the folks in "flyover country" that the tech sector has gleefully been shitting all over for a decade. Perhaps the tech sector will have enough political capital to ensure they get to dump their losses on the public they loath, but it's goin…
> "flyover country" that the tech sector has gleefully been shitting all over for a decade I'm a founder of an Indiana based tech startup. What people in flyover states don't like is seeing stuff like Theranos. They also don't understand operating businesses for 10 years that lose billions. People here do not see the "tech sector" as evil: every flyover state has programs to attract and create tech sector companies.…
The entire system is a house of cards. The collateral of the system itself is debt (USTs). There is no firm ground to stand on after decades of low interest rates. Marginal tweaks to banking regulations neither caused nor can fix this. The Fed is raising rates and we are taking our medicine.
Taking our medicine would imply there are market consequences. It seems the typical gov reaction is some form of bailouts to the high end of the market combined with regulation to further limit the market to a few giant monopolies.
All the matters to people is not ruffling feathers, a sense of security, not about actually solving the root problems that SVB took a massive gamble on mortgages and no one seemed to care.
Gov focusing on helping the depositors is fine. But it sounds like the vast, vast majority of SVBs depositors will be made whole. So that's probably not even necessary. The Yallen stuff is most likely about calming the market, not direct intervention.
Earlier quoted context omitted.
0) Make narrow banking illegal 1) Hold interest rates near zero, inflating the fuck out of the economy 2) Use government to destroy market value of distant maturing bonds by holding real interest rates deeply negative and then rapidly inverting it. Force people to seek ever more risky investments and long term low interest MBS securities just to barely not even break even. 3) Suck all the liquidity out of the market…
A bank failed, and then only because they were doing unwise things with their holdings. Where are all the other failed banks as a result of the long-standing fiscal policy?
Now we could move the goal posts to something else, but the question you ask is not hard to find examples of.
> doing unwise things
In retrospect anything that causes a failure is going to be characterized as "unwise." You could say the wisest thing would be to create a 100% reserve ratio by passing through deposits to the central bank, yet it's impossible to get a banking license to do that. We're left with various shades of unwise.
Weaken regulations, trains and banks crash, but hey small government, slash the red tape.
In fairness, the train crash had bipartisan support.
There are hard tradeoffs here, and one failed bank doesn't mean the wrong choice was made. As I remember it, the reason for weakening these regulations was that Dodd-Frank is/was extremely expensive to comply with, and that created a banking sector where only the biggest banks could survive and it made no sense to start any new banks.
I conducted Dodd-Frank Act Stress Tests for one component of a large bank. For a $400B portfolio I was able to do it with a team of 4 people including myself plus a $100k/year license to Barra and it takes about a week of the whole team’s focus. The thing is, we were already employed by the bank to run risk management and the bank already had the subscription to the software. So from the bank’s perspective it was clo…
Hiring a team of 5, paying a $100k/year software license, etc are big barriers when you’re a small regional bank with $30 million in deposits.
Earlier quoted context omitted.
I conducted Dodd-Frank Act Stress Tests for one component of a large bank. For a $400B portfolio I was able to do it with a team of 4 people including myself plus a $100k/year license to Barra and it takes about a week of the whole team’s focus. The thing is, we were already employed by the bank to run risk management and the bank already had the subscription to the software. So from the bank’s perspective it was clo…
> If a bank says that stress tests are too expensive to run, that means that absent regulatory requirements they would perform no risk management. This feels so damn true about almost every megacorp belly-aching about regulation.
There are hard tradeoffs here, and one failed bank doesn't mean the wrong choice was made. As I remember it, the reason for weakening these regulations was that Dodd-Frank is/was extremely expensive to comply with, and that created a banking sector where only the biggest banks could survive and it made no sense to start any new banks.
I conducted Dodd-Frank Act Stress Tests for one component of a large bank. For a $400B portfolio I was able to do it with a team of 4 people including myself plus a $100k/year license to Barra and it takes about a week of the whole team’s focus. The thing is, we were already employed by the bank to run risk management and the bank already had the subscription to the software. So from the bank’s perspective it was clo…
I'd draw an analogy to having breakfast. If we legally required people to have breakfast every day, that would actually be quite expensive. It'd go from a reflex to something that has to be considered, we have to spend a little bit of time creating evidence that we had breakfast to satisfy the regulator, there'd have to be enforcement where parents check on their kids to make sure they have breakfast, situations where it doesn't make sense to have breakfast (eg, really excessive sleep-ins) now need big reworks to make sure that despite that someone rolls out of bed to have breakfast. The police would roll in and muck up people's life because they skipped breakfast one day due to illness.
It'd be a debacle. It is funny to even imagine what mandatory breakfast would look like if we tried to legally enforce it. It would be expensive, both in dollar figures and hours of lives wasted; no question of it. Just because the act itself is cheap and necessary doesn't make legal compliance cheap and easy. There is a huge gap between the everyday "should do" and the legal "must do".