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Bank Failures Visualized

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Re: Bank Failures Visualized

#41

Post by Aaronstotle »

yieldcrv wrote: post #20
themagician wrote: post #10

Earlier quoted context omitted.

I have faith that we can top S&L. We have the technology. We have the talent. There are six banks with over a trillion in assets in the US. I have faith that one of them has been doing some wild book cooking. I'd place a bet on Citibank, followed by Wells Fargo. There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on… shame on you. Fool me… you can't get fo…

If you like absurdity, FTX has recovered 7.3 billion out of the 8.6 billion hole and plans on relaunching the exchange to make the last billions back in fees Most noteworthy is that this quick 8 month turnaround is partially thanks to the blockchain, and under no new laws being passed

I thought this was because BTC is up 50% from November?

Re: Bank Failures Visualized

#42

Post by bboygravity »

themagician wrote: post #10
thehumanmeat wrote: post #2

That needs to go back to the 80s to capture the SnL crisis. It dwarfs 08 in bank failures. It better indicates the conglomeration of the many banks into the few we have today.

I have faith that we can top S&L. We have the technology. We have the talent. There are six banks with over a trillion in assets in the US. I have faith that one of them has been doing some wild book cooking. I'd place a bet on Citibank, followed by Wells Fargo. There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on… shame on you. Fool me… you can't get fo…

JP Morgan is the biggest one. It can do ANYTHING it wants and get away with it.

It can make 10 billion USD spoofing gold prices for a decade and get away with a 1 billion USD fine (and keep doing it) for example.

The CEO can go on trips with Jeffrey Epstein, be friends with him and do business with him and get away with it.

It made tons of money off of the Madoff ponzi by providing Madoff with a bank account and not reporting the (from their perspective) extemely obvious ponzi that was going on for 15 years. Nobody went to jail and JP Morgan's fine was probably lower than what they made from the ponzi.

There are 100's of other examples of quite outrageous FTX-style crime. This is just what I happened to read about and remember. And that's only the publicly known stuff.

Let's turn it around: why would JP Morgan (and other big banks) NOT be engaged in extreme levels of crime that could be described as "financial terrorism"? If JP Morgan blows up it would be the end of the US and they know it and the US govt knows it. I repeat: they can get away with ANYTHING.

I think you will get your lulz.

Re: Bank Failures Visualized

#43

Post by rrrrrrrrrrrryan »

steve_adams_86 wrote: post #22

Are there no small failures this time around because of ongoing consolidation? This seems to be a dominant trend in economics across the board. Does anyone have a good answer why?

Some midsize banks got a massive inflow of deposits during the pandemic and they didn't know what to do with the money, so they parked it in "safe" investments like mortgage backed securities.

Then when the pandemic subsided, people started burning down their savings accounts, and interest rates started skyrocketing. All the banks' money was tied up in all these 30-year mortgages that nobody wants anymore because they're paying like 2.5% and inflation is 8% now, but they're still forced to sell them for terrible prices just to keep their ATMs full. Eventually word gets out about what's happening, there's a bank run, and the bank starts death spiraling.

Massive banks have nothing to worry about because if the government allows them to fail they'll take the entire economy down with them. And (presumably) smaller banks weren't under the same pressure from investors to generate returns on idle capital, so they didn't commit the same sins as the midsize banks.

Re: Bank Failures Visualized

#44

Post by cperciva »

photochemsyn wrote: post #28

Community-scale banks (aka credit unions) are a better idea for local-regional communities (aka cities and towns and agricultural regions) because their managers have to live with their clients. Take a community of 100,000 families, in an economic system where they're all collecting income and paying bills and so on. The idea behind a bank is that they hold the community's money securely while making their own money…

The model you describe is exactly why S&L happened. Small banks with highly correlated deposits holding their own loan books is a recipe for maximizing vulnerability to economic shocks. Interest rates go up and the loan book loses value; the local housing market drops and the loans get foreclosed and lose value; a major local employer goes out of business and depositors all start pulling their money out instead of reliably depositing paychecks.

Banks don't work that way any more because it's a really bad way to run a bank.

Re: Bank Failures Visualized

#45

Post by tickerticker »

steve_adams_86 wrote: post #22

Are there no small failures this time around because of ongoing consolidation? This seems to be a dominant trend in economics across the board. Does anyone have a good answer why?

SVB's fail was because of radical speed in deposit inflow, which was invested in fixed rate bonds just at the moment that the Fed was on a rising rate ratchet. Because of an affluent clientele, they had unusually high % of uninsured deposits. Very unlikely that a small bank would have had the need to layoff so many deposits in such a short time span. Very unlikely that a smaller bank would have had the high % of uninsured deposits. These are the funds that jump ship immediately.

First Republic fail was because of large pool of fixed rate assets....(jumbo low-rate mortgages and Treasury Notes) in a rising rate context. They also had an affluent clientele and thus a high % of uninsured deposits. The fixed rate assets lost so much value while rates rose, that they had no tangible equity. Thus, the hot money deposits raced out of the bank.

Smaller banks typically don't have such a concentration of affluent customers, which means that more of their clientele would be under the threshold for FDIC insurance. Smaller banks probably have a good book of commercial loans which are commonly priced at a variable rate.

I am baffled that SVB and FRB did not hedge their fixed rate portfolios with interest rate swaps....Maybe their mind was on staying abreast of the white-hot tech sector instead of wringing their hands about the next Fed rate decision.

Re: Bank Failures Visualized

#46

Post by yieldcrv »

Mistletoe wrote: post #36
yieldcrv wrote: post #20

Earlier quoted context omitted.

If you like absurdity, FTX has recovered 7.3 billion out of the 8.6 billion hole and plans on relaunching the exchange to make the last billions back in fees Most noteworthy is that this quick 8 month turnaround is partially thanks to the blockchain, and under no new laws being passed

Are you sure about that $7.3 billion? Last I checked, SBF was counting illiquid nonsense like Serum and MAPS tokens in that number.

SBF is not involved, its the new management and the bankruptcy court

https://www.reuters.com/technology/bankrupt-crypto-exchange-...

Re: Bank Failures Visualized

#47

Post by yieldcrv »

Aaronstotle wrote: post #41
yieldcrv wrote: post #20

Earlier quoted context omitted.

If you like absurdity, FTX has recovered 7.3 billion out of the 8.6 billion hole and plans on relaunching the exchange to make the last billions back in fees Most noteworthy is that this quick 8 month turnaround is partially thanks to the blockchain, and under no new laws being passed

I thought this was because BTC is up 50% from November?

partially, it would be at $6.2bn based on November 2022 crypto prices.

https://www.reuters.com/technology/bankrupt-crypto-exchange-...

Re: Bank Failures Visualized

#48

Post by yieldcrv »

senectus1 wrote: post #32
yieldcrv wrote: post #20

Earlier quoted context omitted.

If you like absurdity, FTX has recovered 7.3 billion out of the 8.6 billion hole and plans on relaunching the exchange to make the last billions back in fees Most noteworthy is that this quick 8 month turnaround is partially thanks to the blockchain, and under no new laws being passed

wth? you got a good link for this? I stopped paying attention a while ago

reuters good enough?

https://www.reuters.com/technology/bankrupt-crypto-exchange-...

Re: Bank Failures Visualized

#50

Post by momofuku »

For the life of me, I'm not able to understand why none of these lists include Lehman Brothers?

A commenter below posted:

>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.

So does this mean, that since Lehman had no customer deposits, it doesn't count?

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