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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

#41

Post by mjlawson »

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.

Also note that the prior large spikes were due in large part to multiple banks failing as well [1]. It's also notable in that this is the second largest bank to fail in the data I've been able to track since 2008 [2].

[1] https://www.fdic.gov/bank/historical/bank/ [2] https://en.wikipedia.org/wiki/List_of_bank_failures_in_the_U...

Re: There have been 562 bank failures since 2000

#42

Post by Kyragem »

Trump and republicans increased the capital treshhold of banks from 50B to 250B where banks must comply with an FDIC stress test as defined by Dodd-frank regulations. A small bank like SVB would have probably been required to hold more capital and wouldn’t have gone bankrupt.

Re: There have been 562 bank failures since 2000

#43

Post by froglets »

rvz wrote: post #34

This is total 'whataboutism'. This bank failure is the second largest of all time in the US, and has a potential massive contagion with lots of ripple effects through the tech industry. This "Not just SVB" and "There have been 562 other bank failures before" deflection doesn't help those affected.

Is it just the tech industry though? It sounds like they invested too much of their deposits in mortgage backed securities, which doesn’t really have to do with tech?

Re: There have been 562 bank failures since 2000

#44

Post by frankfrankfrank »

tines wrote: post #36
saveferris wrote: post #27

Earlier quoted context omitted.

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 painfu…

I know nothing about economics. Can you help me understand how raising taxes helps deal with inflation? Is the idea that the federal government "deletes" some of the money it receives through taxes, like the opposite of printing more money which cheapens the existing supply?

Yes, on the face of it. The issue with what appears to be the same old game is that those who absconded with the wealth pillaged through funny money, are not going to be the ones getting punished to “fix things”. This opens up a whole different set of cascading consequences because now on top of the moral hazard we had, we’ve gone well beyond that because the perpetrators have learned there are not only no consequences, but that you will be rewarded for your evils.

Combined with other factors too numerous to really go into here, we are seeing the emergence of essentially an aristocracy in the USA and Europe, consisting of, as the earlier aristocracy, of the pillagers of their own people and the people of the rest of the world.

Re: There have been 562 bank failures since 2000

#45

Post by jvanderbot »

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.

Wait so svb made up that whole spike? A chart with number of banks would hardly show a blip this year?

Re: There have been 562 bank failures since 2000

#46

Post by bink »

Waterluvian wrote: post #5
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’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.

Not valueless, exactly. The mortgage backed securities were rated more highly than they should have been as the default rate was assumed to be much lower. When that became obvious the securities lost a lot of value and the banks found out they were over-leveraged.

I'm not in finance (clearly), but it seems to me there are a lot of similarities with interest rates rising and forcing banks to re-value their investments in bonds and mortgage backed securities. The clear difference this time IMHO is that valuing bonds based on interest rate movements is much less opaque (even fully transparent) compared to valuing mortgage backed securities based on default rate predictions that are outright lies.

We know, or should know, how many of these investments are held by large banks and what the rates and maturation dates are. The big question I have is the more traditional financial contagion. If companies that had millions in SVB lose that money there will be impacts for other banks as the companies and bank investors become more conservative or paranoid. If many of those companies go out of business that means fewer deposits and fewer investment opportunities.

Re: There have been 562 bank failures since 2000

#47

Post by frankfrankfrank »

TheOtherHobbes wrote: post #35
Grimburger wrote: post #23

Earlier quoted context omitted.

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.

Inflation is caused by profiteering and opportunism aided by the occasional supply shock. Trying to control it solely with interest rates makes as much sense as trying to fly a beach ball to Mars.

Those are simply common correlate effects. Inflation is really rather simple, it is inflation of the money supply, i.e., printing more Monopoly money for oneself, knockoff purses, using chemicals to create fake honey, it’s what counterfeiters do … whether it’s some North Koreans or the federal government … its fraud, criminal, illegal, immoral, evil, and a clear indicator of illegitimacy of this or any government that does what this fake government has done.

Re: There have been 562 bank failures since 2000

#48

Post by AnimalMuppet »

tines wrote: post #36
saveferris wrote: post #27

Earlier quoted context omitted.

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 painfu…

I know nothing about economics. Can you help me understand how raising taxes helps deal with inflation? Is the idea that the federal government "deletes" some of the money it receives through taxes, like the opposite of printing more money which cheapens the existing supply?

That is an interesting idea, but it won't happen, because Congress won't "delete" the money. Instead, they'll spend it.

Re: There have been 562 bank failures since 2000

#49

Post by pranshum »

xeeeeeeeeeeenu wrote: post #22

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

OP here, you're right! Argh, this is embarrassing. Thanks for spotting this, fixed now.

Re: There have been 562 bank failures since 2000

#50

Post by MonkeyMalarky »

jacquesm wrote: post #31
MonkeyMalarky wrote: post #26

Earlier quoted context omitted.

Between covid, an attempted insurrection, proxy war with Russia and now this potential financial crisis, there's a new black swan event happening every ~12 months.

How many black swans make a flock? At this rate the unpredictable and rare events are becoming frequent enough to lose that status.

The analogy kind of breaks down because black swans all look the same so I'll propose switching to snowflake events. Each one is beautiful and unique and we're starting to head into a flurry of them.
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