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There have been 562 bank failures since 2000

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Re: There have been 562 bank failures since 2000

#111

Post by samstave »

My mom was a contracts law/construction loan specialist at several diff banks (key bank, wells fargo, Wachovia, etc)

The horror stories from her experiences were nuts.

They are all bad.

I met a Giannini in San Mateo (I went to school with his (great?) grandkids in Tahoe (they use to be dropped off in a bently each morning to north lake tahoe HS...

The bank consolidation has been bad.

I met Giannini in San Mateo, and he was telling me how "important family is"....

It was tough to hear how the most important thing is "family" from a billionaire who has never struggled with money and owns Bank of America.

Fuck banks.

Re: There have been 562 bank failures since 2000

#112

Post by MrFoof »

vkou wrote: post #80
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…

> But the real question is, of those $1 trillion in assets, how much did people actually lose, and how much did either the FDIC or a taking-over bank cover? Anybody have that number? Zero. Since the FDIC was founded, no depositor has lost a dollar of deposits in an FDIC-insured institution. There are some non-deposit things that, if you squinted, looked a bit like deposits, and people have lost out on those.

I believe the reason you are being downvoted is over a technicality.

It is correct that no depositor has ever lost a penny of FDIC-insured deposits. This is excellent for the average person, as the average normally-employed person isn’t the one worrying about losing large piles of money.

Uninsured deposits is an entirely different ball of wax. In the case of IndyMac for example, of the ~$19B in deposits, roughly ~$1B was uninsured. This was out of ~$32B AUM. I’m not sure what haircut was taken on uninsured deposits, nor other instruments. FDIC’s Sheila Behr has spoken about the receivership of IndyMac in the past and has said that the FDIC’s reserve took about a $9B hit to deal with IndyMac.

Re: There have been 562 bank failures since 2000

#113

Post by Scoundreller »

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.

There are other banks that didn't make the official list, but effectively should have.

National City Bank was the US' 7th largest banks. It didn't "fail", but the US Treasury gave another bank, PNC, $5.7b in a capital injection to buy it in late 2008.

https://abcnews.go.com/Business/story?id=6107696&page=1

https://www.cleveland.com/business/2008/10/national_city_mov...

Re: There have been 562 bank failures since 2000

#114

Post by Scoundreller »

beebmam wrote: post #58
mike_d wrote: post #52

Earlier quoted context omitted.

Almost all failed banks (including SVB) in recent history held more assets than deposits. Liquidity is the issue. Imagine you take your $10 million fortune and convert it all into gold bars and hide it under you bed. Then you order a pizza. When the pizza guy shows up, even though you are "rich," you are also in that moment broke and can't pay for the pizza. Not only will the pizza guy not take gold, you can't find s…

Except instead of just leaving, the pizza guy sues you and the state takes your gold bars under your bed and sells it to pay the pizza guy. Not saying this is a bad or good thing.

... and sells it ASAP for any price, as long as it's more than the cost of the pizza. No need to wait until tomorrow to get market value when you can recover your losses today.

Re: There have been 562 bank failures since 2000

#115

Post by Scoundreller »

pclmulqdq wrote: post #8
Waterluvian wrote: post #5

Earlier quoted context omitted.

I’m still not clear on if it’s even the same. My very weak understanding is that in 2008 a ton of assets turned out to be valueless junk mortgages that were all going to default. Is that true for SVB or are their assets just too locked in for now? What that graph doesn’t show is the percentage of the blue bars that are recoverable assets.

I'm not sure if we know how much of the blue bar is recoverable. SVB is holding a lot of fixed-income vehicles that currently yield less than: * Depositing money in a fed account (available to banks) * Depositing money in a money market savings account * Every treasury instrument you can buy today When they go to sell those assets, they may take a much bigger haircut than the pricing models suggest given the supply a…

> Every treasury instrument you can buy today

Treasuries don't even need to pay more than a savings account to be the rational choice as they aren't subject to local/state income taxes. That's a bigger than average advantage in California.

Add to that no $250k limit either.

Re: There have been 562 bank failures since 2000

#116

Post by Scoundreller »

dragonwriter wrote: post #66
ezekg wrote: post #63

Earlier quoted context omitted.

It’s been a day. We don’t know anything. The day before SVB fell, everybody said everything was fine. There could very well be contagion come Monday.

> The day before SVB fell, everybody said everything was fine. Well, no, people were saying “Get your money out of SVB if its above the insurance limit”, because the run was already happening and that SVB couldn’t handle the run was a pretty widespread opinion. But, while there are systemic/institutional/regulatory reasons why SVB’s conduct which created the vulnerability was possible, it doesn’t seem that the vulner…

Wouldn't we expect a lot of orgs to suddenly start caring if they have more than $250k in their accounts and start spreading it out over the next week, or removing it from banks entirely and putting into treasuries or other assets?

Or withdrawing entirely from niche/smaller banks and into bigger/more diversified ones?

(diversified banks are great because payday becomes mostly book entries instead of massive inflows/outflows on payday)

Re: There have been 562 bank failures since 2000

#117

Post by Scoundreller »

raziel2701 wrote: post #69
ezekg wrote: post #60

Earlier quoted context omitted.

Yes. SVB was the first bank failure since 2020.

Wasn't silvergate the first failure just days before SVB?

Yes and No. Depends how you track "failure" and from which Point of View:

> Silvergate Capital Corp.'s voluntary liquidation process is being supervised by the state of California, and the company has not entered the Federal Deposit Insurance Corp.'s receivership program at this point, a spokesperson for the California Department of Financial Protection and Innovation confirmed.

https://www.spglobal.com/marketintelligence/en/news-insights...

Other banks in the past have "failed", but not from FDIC point-of-view, instead merged into others through a shotgun marriage facilitated by the feds, e.g. Bear Stearns and National City Bank[0] (formerly a top10 US bank until late 2008)

[0]https://news.ycombinator.com/item?id=35113816

Re: There have been 562 bank failures since 2000

#118

Post by Scoundreller »

mdasen wrote: post #11

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 fail…

Can add National City Bank (7th largest US bank in 2008), to the list of banks that didn't "fail", but totally failed through a similar nudged-sale process like Wachovia (4th largest at the time).

Re: There have been 562 bank failures since 2000

#119

Post by Scoundreller »

SilverBirch wrote: post #88

One thing that's kind of weird here is the peverse incentives. There are quite a lot of people going around insisting that the government has to step in and bail out the large depositors of SVB becuase if you don't, well... then no small bank is safe! There should be a run on every bank! Which is kind of... you know. Scummmy. If your money is locked up in SVB its certainly convenient if the Fed feels it has to step i…

What I'd like to know is what services SVB offered to startups that other banks wouldn't/couldn't/didn't. And if other banks wouldn't/couldn't/didn't, if there was a valid reason for it.

I can understand legacy banks not wanting to touch crypto, but what about the rest?

Or was a lot of SVB adoption just due to name recognition in the startup ecosystem?

Re: There have been 562 bank failures since 2000

#120

Post by Scoundreller »

dpkirchner wrote: post #13
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?

Plenty of small and old banks across USA. Not sure how they get by on the back-office side, but they do!

Just looked up a US sibling's bank and it was chartered over 100 years ago and has 3 branches.

Then there are credit unions, which are another beast that sits outside of FDIC.

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