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Bank Failures Visualized

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Re: Bank Failures Visualized

#311

Post by roflyear »

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…

Thanks for that!

Re: Bank Failures Visualized

#312

Post by roflyear »

ekianjo wrote: post #223
ajross wrote: post #132

Earlier quoted context omitted.

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.

Are you trying to say that the current crisis is nothing ? These are famous last words.

Voices of moderation are just that.

Re: Bank Failures Visualized

#313

Post by lottin »

lesuorac wrote: post #308
lottin wrote: post #286

Earlier quoted context omitted.

What do you mean clawbacks? Blockchain transactions are irreversible, right?

Sure but a court can order you to do a future transaction that effectively reverses the original. (Akin to how almost every single reversed transaction _actually_ works). And if you refuse, they can order your local (or not so local) PD to jail you until you comply. Blockchain still exists in the real world with its very real rules.

Well, of course... but if they're relying on court orders how is exactly blockchain technology helping in this process?

Re: Bank Failures Visualized

#314

Post by _heimdall »

majormajor wrote: post #292
_heimdall wrote: post #242

Earlier quoted context omitted.

> FDIC premiums are not payed by taxpayers Tax payers are legally required to pay taxes in USD. I'm not actually sure if the IRS technically accepts cash but if so it would be extremely rare. Meaning all tax payers have a bank account and ultimately foot the bill even though it is technically funneled through the banks' books first.

"Footing the bill by having a bank account" is one of those very-hard-to-picture-or-feel things in days when most bank accounts are "free" and these banks have so many lines of business. E.g. am I paying for FRBs bailout by increased loan application fees if I buy a house or car or such? That's what I'd imagine, or maybe it's just that maybe otherwise savings accounts would pay a bit more interest or something?

Yeah it's tricky, if not impossible, to pin down exactly how any one person's money flows through the books but at the end of the day all bank profits come from their customers. We may pay account fees, overdraft fees, document and origination fees when they open a loan, interest on a loan if they don't sell it, etc.

Banks are in an interesting place because effectively any tax payer is going to have to have a bank account. In my opinion, that means tax payers are directly funding banks and the FDIC.

There are other types of customers for banks so I wouldn't argue that tax payers are exclusively paying those feels but it feel disingenuous to see politicians claim tax payers aren't footing the bill at all.

Re: Bank Failures Visualized

#315

Post by _heimdall »

kasey_junk wrote: post #247
_heimdall wrote: post #238

Earlier quoted context omitted.

The definition of M1 and M2 money was changed in May 2020, conveniently right as the government started printing money for their pandemic response.

But inconveniently long after savings accounts started being demand deposits due to online bill pay, atms and easy access to electronic funds transfers. If you are going to complain about changing the definitions you should complain that they did it too late.

Yep you raise a great point, but I'm not quite sure how I'd peg the "right" time for them to have changed the definition.

Whenever the definition is changed at a minimum it means historical data can't be compared easily across the different definitions.

My main point here was simply that comparing M1 or M2 money between now and anytime prior to May 2020 is likely not a useful number.

Re: Bank Failures Visualized

#316

Post by beginnings »

lottin wrote: post #259
beginnings wrote: post #224

Earlier quoted context omitted.

No, governments don't control the money printing machines. Scrapping interest means that when the money is loaned after being printed, there isn't a debt attached to it.

I don't think that this makes any sense. Debt is inherent to the act of lending. A loan that doesn't have a debt attached to it isn't a loan, it's a donation.

Are you actually that dense, or are you being obtuse? Of course, the initial loan amount is owed. So when I say a debt is attached, it means it's added on top of the loan amount, that's called interest.

What I mean by scrapping interest, is that no extra debt is created when money is loaned after being printed. If 500 is loaned, 500 is owed. The way it currently is, the loan amount is owed plus interest, creating a debt that can never be paid because there isn't enough money in existence to pay it.

The Germans had a saying - "One Mark for one Mark's worth of work or goods produced". This is how they solved the inevitable hyperinflation of the international system.

They went from a situation where you couldn't buy a loaf of bread with a barrel of Marks, to being the richest nation in Europe within 3 years. That's why WW2 happened, it was a clash of economic ideologies.

Re: Bank Failures Visualized

#317

Post by thedufer »

sam_goody wrote: post #284
thedufer wrote: post #265

Earlier quoted context omitted.

I think that's a misinterpretation of the data. Based on reports, SVB had around 130B of deposits when it was taken into receivership. Something like 90% of that was uninsured, so around 115B of uninsured deposits. The 20B hole means that without FDIC backing the uninsured deposits, they still could have paid out over 80 cents on the dollar. So if the top ten accounts had about 13.3B of deposits, they only received l…

Accepted, and thank you for the clarification. At the time of the collapse there were definitely articles making that claim, with analysis and numbers, and I still assume it to be correct. When I saw this, I was surprised, it seemed too clean and straightforward. Will have to look for the original sources.

I strongly suspect that any sources that claimed that simply made the same error that you did.

Looking at the source you provided from the Chairman of the FDIC, it actually says that the top ten accounts held $13.3B - not _more than_ $13.3B, as you claimed. The next ten accounts necessarily held less than that, so say a generous upper bound at $26.6B for the top twenty accounts. In order for them to get at least half of the bailout, they would have needed to hold north of $55B in aggregate. The FDIC itself would have to have gotten the size of SVB's largest depositors wrong by over double in order for your original claim to be true, in the absolute most generous case.

Re: Bank Failures Visualized

#318

Post by haldujai »

DonsDiscountGas wrote: post #233
haldujai wrote: post #114

Earlier quoted context omitted.

At the very least that’s missing Fannie, Freddie, Bear, Merrill, Lehman, TARP and arguably AIG for another 1.2T+, granted a lot of this was eventually repaid as the FDIC will be as well.

None of those are consumer banks. Every dataset has to make scope decisions.

If we're comparing the Great Recession which was not caused by or relatively impacted consumer banks it seems arbitrary to limit the dataset to them.

Re: Bank Failures Visualized

#319

Post by FormerBandmate »

btilly wrote: post #25
FormerBandmate wrote: post #7

Earlier quoted context omitted.

08 was artificially low because many banks got merged at a fire sale. Wachovia, Merrill Lynch, Bear Stearns, and National City stick out. Other financial institutions got essentially nationalized and stock became mostly worthless like Citi and AIG, although the government sold most of their stock in 2011 Credit Suisse is about the same size as SVB, Signature Bank, and First Republic combined but it got “acquired” by…

Credit Suisse is not included because it is a Swiss bank, not an FDIC insured US bank. Lehman Brothers is also not included because, even though it was a US bank, it was an investment bank with no FDIC insured deposits. It was around the size of all of this year's failures, combined. As you note, bank bailouts that were not FDIC bankruptcies are also not included.

I know all of that, but they are still important caveats. We are not in a worse place than 08 (yet)

Re: Bank Failures Visualized

#320

Post by lottin »

beginnings wrote: post #316
lottin wrote: post #259

Earlier quoted context omitted.

I don't think that this makes any sense. Debt is inherent to the act of lending. A loan that doesn't have a debt attached to it isn't a loan, it's a donation.

Are you actually that dense, or are you being obtuse? Of course, the initial loan amount is owed. So when I say a debt is attached, it means it's added on top of the loan amount, that's called interest. What I mean by scrapping interest, is that no extra debt is created when money is loaned after being printed. If 500 is loaned, 500 is owed. The way it currently is, the loan amount is owed plus interest, creating a d…

I see... you mean banning interest. That would be a form of price control, and price controls don't tend to work very well, historically. The idea that there isn't enough money to pay interest is "interesting", but unfortunately it's also wrong. At any rate, when there isn't enough money what happens is deflation, not inflation.
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