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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

#21

Post by frompdx »

kibwen wrote: post #10

Is that "second largest bank failure of all time" adjusting for inflation?

Based on the wiki for WaMu, the numbers are not inflation adjusted. According to the BLS CPI calculator, $1.00 in October 2022 has the buying power of $0.73 in September 2008, when WaMu failed. 20.9b is closer to 15.3b in 2008 dollars. Based on the graphic in the post, it's still the second largest, yet half as large as the largest.

As a disclaimer, I'm not an expert and am unaware what flaws my analysis may have.

https://en.wikipedia.org/wiki/Washington_Mutual

https://www.bls.gov/data/inflation_calculator.htm

Re: There have been 562 bank failures since 2000

#22

Post by xeeeeeeeeeeenu »

All the numbers in the chart have a decimal point in the wrong place. Washington Mutual had $307bn in assets[1] (not $30.7bn), SVB had $209bn[2] (not $20.9bn), etc.

[1] - https://www.fdic.gov/resources/resolutions/bank-failures/fai...

[2] - https://www.fdic.gov/news/press-releases/2023/pr23016.html

Re: There have been 562 bank failures since 2000

#23

Post by Grimburger »

latency-guy2 wrote: post #7
bink wrote: post #3

Earlier quoted context omitted.

Yeah, I don't know anyone saying "it's just SVB since 2000". They're saying SVB is the first major bank in a long time (and hopefully not a harbinger of things to come).

It sure is, and I hope congress and the Fed learns their lesson this time, seeing as some of the same people who worked in previous economic failures are still around, I doubt it.

What lesson is that? To allow inflation run rampant in order to protect Basel exempted businesses from their own bad decisions?

Inflation must be tamed, it's detrimental longterm effects is magnitudes worse than a bank deservedly going bust for it's lack of risk management.

Re: There have been 562 bank failures since 2000

#24

Post by ajross »

xwdv wrote: post #12
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.

See, that's exactly the attitude that's prevailed for the past 6 years or so. And what I'm saying is that to me that's clearly a rationalization. It's something the finance bros tell themselves to explain why the stuff they like (dealmaking) is more important than the stuff they don't (making stuff people want).

Interestingly, we've been here before, in the hangover of the dot com boom. And what lifted us out of that mindset was... Y Combinator. Now? YC is maybe the biggest single part of the problem. Just go look at their funding list for the last 3-4 years and genuinely think on how many of those ideas really need the kind of funding you're imagining.

Re: There have been 562 bank failures since 2000

#27

Post by saveferris »

Grimburger wrote: post #23
latency-guy2 wrote: post #7

Earlier quoted context omitted.

It sure is, and I hope congress and the Fed learns their lesson this time, seeing as some of the same people who worked in previous economic failures are still around, I doubt it.

What lesson is that? To allow inflation run rampant in order to protect Basel exempted businesses from their own bad decisions? Inflation must be tamed, it's detrimental longterm effects is magnitudes worse than a bank deservedly going bust for it's lack of risk management.

Not the poster you asked. But, a lesson we continue to ignore is that there are other options to tame inflation besides raising interest rates. The problem is the option isn’t politically expedient so Congress just raises its hands in mock exasperation and says well, it’s the Fed’s mandate to manage inflation.

Congress are cowards and won’t do what should be done - raise taxes. That is likely the fastest least painful long term solution to quickly climbing inflation

I say likely solution because at this point economies are so complex I’m not certain there are solutions without any butterfly effect consequences

Re: There have been 562 bank failures since 2000

#28

Post by arcticbull »

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 chart would probably be more useful if expressed as the shortfall between assets and deposits. It's not really a huge issue if a bank with $1T in assets has a $1M shortfall but the regulators will sure a shit still close it down.

Re: There have been 562 bank failures since 2000

#29

Post by gnfargbl »

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.

I'll ask the obvious question, because I have no clue about this stuff. The early failures in 2008 seem to have been followed by a cascade of smaller failures. Is that going to happen again?

Re: There have been 562 bank failures since 2000

#30

Post by FormerBandmate »

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…

SVB is the second largest failure ever. Nobody really cares in finance circles if some tiny bank in Missouri with $5 million in assets fails, people certainly do about this
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