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Bank Failures Visualized

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Re: Bank Failures Visualized

#131

Post by DSMan195276 »

jeremyjh wrote: post #78
fragsworth wrote: post #31

Earlier quoted context omitted.

You are correct. Additionally, the size of the bank(s) are not really what matters. I want to see the scale (sum) of what was actually lost when they went bankrupt, and how much we (the public) have to put up to keep the system from collapsing. Does anyone have an actual visualization of how much we ponied up to keep our banking system from collapsing? Did the public just provide a reasonable interest rate loan for a…

There were winners and losers, but the government made money on TARP. That doesn't fit anyone's narrative very well, so you don't hear that much about it, but its a fact. So far not a public dollar has been lost in the current crisis. FDIC, like other insurance, is paid for by the insured. Every FDIC bank in the country is paying the cost of this. https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program

The problem with those numbers is that TARP lost money if you account for inflation over that period. That said the point wasn't to make the government money anyway, so whether that matters is up to you.

Re: Bank Failures Visualized

#132

Post by ajross »

kypro wrote: post #79

Would be slightly more insightful if it was inflation adjusted. The circles on the right should be ~30% smaller.

It's also leaving out non-FDIC bank failures like Lehman, Bear Stearns et. al. which would make the '08 crisis much (MUCH) larger.

Basically post-2008 the class of "investment banks" basically disappeared. But none of that is shown in this chart.

Re: Bank Failures Visualized

#133

Post by highwayman47 »

beginnings wrote: post #75

National governments should control their own money, scrap interest entirely. Let the market decide what each currency is worth for international trading. The status quo international banking system is designed to enslave, and governments can't do anything about it because the banks are above them. How anyone can defend the current system is beyond me. It's not remotely close to being the best we can do, it's a scam…

What is the alternative?

Re: Bank Failures Visualized

#134

Post by [deleted] »

bobbylarrybobby wrote: post #110
kypro wrote: post #79

Would be slightly more insightful if it was inflation adjusted. The circles on the right should be ~30% smaller.

And if the circles’ areas, not their radii, were the failed assets. As it is, a circle’s apparent size (we judge 2D shapes by their area, not any one linear dimension — although this is difficult to do in practice, and linear marks are generally superior) is the failure size squared , which distorts the data a boatload. Here is a, er, more faithful representation of the data. The recent failures don't look quite so c…

[deleted]

Re: Bank Failures Visualized

#135

Post by haldujai »

JoeAltmaier wrote: post #99

Yes, yes, inflation changes things (a little) but the glaring result is, these bank failures are massive, significant and unprecedented. We can find historical failures of adjacent institutions but clearly something new is happening?

If two regional banks failing with little realized loss is massive and unprecedented how would you describe 2007-2008 when the entire world economy was brought to its knees with napkin math ~1.2T of bailouts/failures in the US let alone Europe with several banks nationalized (e.g. UBS and RBS) and nation states defaulting on debt?

Re: Bank Failures Visualized

#136

Post by hibikir »

foota wrote: post #92
fisherjeff wrote: post #87

Earlier quoted context omitted.

SVB and FRC did not “leverage themselves on risky speculation bets.” They made lots of very safe investments but did not adequately hedge against large and rapid rate increases. Also not good but it’s a big difference, IMO.

The only safe investment is a hedged investment, antthing else is up to your priors. While interest rates going up as much as they did may have seemed unlikely, it was still irresponsible not to hedge their risk.

Not even most hedged investments at large scales. Hedging doesn't make risk disappear: It just shifts it somewhere else, either to someone even larger, or dispersed among many parties. When the risk is correlated with the risk from others, like the trillions in underperforming treasuries that the bing banks have in their balance sheets, who is the safe counterparty? Not the next bank, which also has a similar position. We saw this with the housing crisis and synthetic CDOs, and we see this on insurance against sufficiently large natural disasters.

So sure, small banks failing to hedge is irresponsible, but at a large enough scale, someone holds the bag.

Re: Bank Failures Visualized

#137

Post by bobbylarrybobby »

Agent-Cooper wrote: post #129
bobbylarrybobby wrote: post #110

Earlier quoted context omitted.

And if the circles’ areas, not their radii, were the failed assets. As it is, a circle’s apparent size (we judge 2D shapes by their area, not any one linear dimension — although this is difficult to do in practice, and linear marks are generally superior) is the failure size squared , which distorts the data a boatload. Here is a, er, more faithful representation of the data. The recent failures don't look quite so c…

The circles' areas are showing the failed assets. Observable Plot defaults to using a square root scale when encoding a quantity with the radius of a circle. https://observablehq.com/plot/marks/dot#dot-options

TIL, thanks. Guess they are crazy after all.

Re: Bank Failures Visualized

#138

Post by lazide »

zamnos wrote: post #112
dlisboa wrote: post #77

Earlier quoted context omitted.

FDIC limit is 250k per bank, so if you have 1 million you'd need 4 banks. If you have 10 million you'd need 40 banks. Having money spread out like that doesn't seem easy to manage. Also having 10 million in one bank gives you better interest rates and service at that bank than if you only had 250k.

Cash sweep products are a thing. For example, Wealthfront will sweep your cash into a bunch of smaller banks, putting 250k in each, so on the off chance they fail, your money's not been disappeared.

The last time anything like that happened was what, over a decade ago? People forget (for real).

Also, no one seems to have lost a dollars yet in this crisis (on the depositor side), so hard to say anyone ‘lost’ this time either.

Re: Bank Failures Visualized

#139

Post by lazide »

noduerme wrote: post #88
apaprocki wrote: post #83

Earlier quoted context omitted.

If you’ve ever tried to practically use multiple banking institutions in the US, especially through the 80s-90s, you’d immediately relate to only using a single account regardless of what the statistical hazards are. It’s 2023 and my institution limits Zelle transfers to $2,500/mo. Want more, just as fast? Back to human wires and fax machines…

Really? You could always just go get a cashiers check and walk it over to another bank. Now I've got accounts at several banks with free online transfers between them (2-3 business days)... it was more of a process in the 90s, sure, but now you can open a checking account at any major bank, link it to another bank and fuel it in 5-10 minutes. Not with Zelle, just a normal domestic wire which is usually paid for by th…

You’ve just described days of paperwork at most banks, in my experience, and with large amounts, things can get stuck on ways that will be days more.

If you’re dealing with large sums regularly, that quickly balloons into an unmanageable mess.

Re: Bank Failures Visualized

#140

Post by haldujai »

rout39574 wrote: post #81
EGreg wrote: post #51

So basically, a ton of more failures in teh past, now it's slowed down but we are losing our stuff over it?

I'd say, "Our few failures now, which we think of as plausibly just the leading edge, are already comparable in size to the _entire_ 2008 cascade." Losing stuff now seems... premature, but not insane.

This is not even remotely close to 2008… This figure conveniently excludes the largest 6 failures of 2008, TARP, and major international banks and insurers simultaneously affected.

As a reference the prospect of AIG failing without a bailout was so significant it became an international issue threatening both US and EU economic stability. SVB and FNB are borderline irrelevant in comparison.

The amounts reflected in SVB and FNB are also exaggerated as the money isn’t “lost” as if parent can obtain liquidity elsewhere (via government or merger) the asset will return principal + interest at maturity.

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