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There have been 562 bank failures since 2000

yarn.pranshum.com

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Re: There have been 562 bank failures since 2000

#11

Post by mdasen »

It's not just SVB, but the title is a bit misleading. There's been 22 failures since 2016 and 10 since 2018 and they've been really small compared to SVB. The article has this information so it isn't a misleading article, but damn the title is misleading. The 562 number makes it seem like bank failures are really common.

These failures aren't common, especially of SVB's size. Washington Mutual is the only larger failure at the height of the 2008 financial crisis (47% larger). The next largest was IndyMac, but SVB's failure is 6.5x larger than IndyMac (which also failed during the financial crisis).

As the article shows, there were many years of fallout from the 2008 crisis, but then bank failures became quite rare again.

The author believes that SVB will be acquired given that's what happened to Washington Mutual. The author doesn't talk about Wachovia and they technically were bought before failure, but they were bought as well. However, I'm less sure of this for SVB. WaMu and Wachovia had vast branch and ATM networks allowing Chase and Wells Fargo to hugely increase their footprint. SVB doesn't come with that. Given that SVB has seen a run on its deposits and its reputation shredded, is it coming with enough stuff to be worthwhile? I guess it'll depend on how bad its situation is. When Wells Fargo bought Wachovia, they essentially doubled in size and had the largest branch network in the US. WaMu essentially doubled the size of Chase. In both cases, it opened up huge new parts of the country to the acquiring banks. What does SVB offer? Existing relationships with tech companies which have now soured?

I think calling this "not just SVB" is misleading. SVB really stands alone as an extremely large failure and the only large failure since the end of the 2008 financial crisis. Maybe that will change in the coming weeks or months, but lumping them in with 562 other failures (most of which were a result of the 2008 financial crisis) is really misleading - especially for an article that is actually good.

Re: There have been 562 bank failures since 2000

#12

Post by xwdv »

ajross wrote: post #4

"Bank failures" are routine. Most banks are small. Small businesses make mistakes and fail all the time. Banks are just a special kind of business with a federally-mandated insurance regime and so fail in specific and spectacular ways. A smaller company that can't make payroll files chapter 11 and gets acquired piecewise over several years. A bank that fails gets instantly seized by the FDIC. SVB happens to be notabl…

It’s because “ramen profitable” is for losers now: Small bootstrap operations with uninteresting tech trying to not starve.

The days of dorm room wunderkids are over. You don’t build a company like Facebook anymore with one guy and a website. Big tech is always watching and anyone that is doing anything of potential will attract money. If they aren’t, then it’s because the potential isn’t there, so we don’t care.

Re: There have been 562 bank failures since 2000

#13

Post by dpkirchner »

AnimalMuppet wrote: post #6

So I looked it up. As of September 30, 2022, there are 4,746 commercial banks in the US. That's 11.8% failure in 23 years. That includes 2008. Those banks total $23.6 trillion in assets. Looking at the tweet cited by ezekg, I'd eyeball that as about $1 trillion in assets in the banks that have failed in the last 23 years. So, 11.8% by number of banks, but only 4.2% by assets. That's still more than I thought. But the…

I'm curious how many of these banks were young -- like were they fly-by-nights or were they established players that made bad bets?

Re: There have been 562 bank failures since 2000

#14

Post by capableweb »

jansan wrote: post #9

But with the other banks there never were six top stories at the same time on Hacker News' front page.

Makes sense. Y Combinator is a startup incubator who created HN, HN was originally called Startup News and there is probably no other bank so closely associated to startups as Silicon Valley Bank. HN is basically "Silicon Valley News".

Re: There have been 562 bank failures since 2000

#17

Post by capableweb »

ajross wrote: post #4

"Bank failures" are routine. Most banks are small. Small businesses make mistakes and fail all the time. Banks are just a special kind of business with a federally-mandated insurance regime and so fail in specific and spectacular ways. A smaller company that can't make payroll files chapter 11 and gets acquired piecewise over several years. A bank that fails gets instantly seized by the FDIC. SVB happens to be notabl…

> "Bank failures" are routine

At different points of time, yeah. But not recently. Last "bank failure" in the US before SVB seems to have been October 23, 2020. Not sure you can call something that hasn't happened for the last ~2.5 years is "routine".

Re: There have been 562 bank failures since 2000

#19

Post by rektide »

ezekg wrote: post #2

I’m surprised the author didn’t include a chart like this: https://twitter.com/alistairmbarr/status/1634275645235793920 . It shows how bad the SVB situation really is. It’s been very quiet since 2008 and its aftermath. Until now.

That shows money, which is interesting.

I'd also like to see "Years of Banking Institutions Lost"... SVB is supposedly 40 years old... how old were banks that had failed in the past? That'd be an interesting other way to tally/view the magnitude of what happens, a kind of indicator of volatility.

My thought is... if a whole bunch of banks open then shut down 3 years latter, it doesn't seem as notable as a bunch of more established banks going under.

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