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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

#51

Post by lazide »

arcticbull wrote: post #28
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.

No bank with $1T in assets will ever have a shortfall of only $1m - it’s too easy to shuffle things around to move the problem forward another day or whatever.

A bank the size of SVB has a whole team that does that - it’s just a necessary part of operating at that scale.

Blowups like SVB happen when an entire team of financial experts have tried everything - and have nothing left they can do.

Then it blows up big, because all their other moves ‘come due’ at once.

Re: There have been 562 bank failures since 2000

#52

Post by mike_d »

arcticbull wrote: post #28
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.

Almost all failed banks (including SVB) in recent history held more assets than deposits. Liquidity is the issue.

Imagine you take your $10 million fortune and convert it all into gold bars and hide it under you bed. Then you order a pizza. When the pizza guy shows up, even though you are "rich," you are also in that moment broke and can't pay for the pizza. Not only will the pizza guy not take gold, you can't find someone to convert your gold into cash before the pizza guy gives up and leaves.

Re: There have been 562 bank failures since 2000

#53

Post by resource0x »

eqmvii wrote: post #33
gnfargbl wrote: post #29

Earlier quoted context omitted.

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?

It might. Have to see what else breaks and/or gets bailed out on Monday.

I'm very curious about the bailout criterion. They can't set the rules individually for each "problematic" bank. Whatever formulation they come up with, will be immediately abused by creative financial engineering, so the problem will soon re-emerge in a different, totally unexpected shape.

Re: There have been 562 bank failures since 2000

#54

Post by ad404b8a372f2b9 »

MonkeyMalarky wrote: post #26
radicaldreamer wrote: post #18

Seems like we have a systemic crisis every 5-7 years

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.

The H5N1 scare was around 2006, Russo-Georgian war in 2008, and the financial crisis in 2008.

SARS 2002, Afghanistan 2001, Dot-com crash 2000.

AIDS becomes the leading cause of death for men 1991, Gulf War 1990, Collapse of USSR 1991, early 1990s recession.

AIDS 1981, Soviet Afghan war 1979, early 1980s recession

Re: There have been 562 bank failures since 2000

#55

Post by lazide »

mxkopy wrote: post #38
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…

> Congress are cowards and won’t do what should be done - raise taxes. They're still cowards for not doing it but what should've been done is an increase in interest rates half a decade ago.

The fed tried - and the chairman almost got fired for it. Remember?

[https://www.cnbc.com/amp/2018/12/22/trump-reportedly-wants-t...]

Almost 5 years ago exactly.

Re: There have been 562 bank failures since 2000

#56

Post by tshaddox »

mike_d wrote: post #52
arcticbull wrote: post #28

Earlier quoted context omitted.

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.

Almost all failed banks (including SVB) in recent history held more assets than deposits. Liquidity is the issue. Imagine you take your $10 million fortune and convert it all into gold bars and hide it under you bed. Then you order a pizza. When the pizza guy shows up, even though you are "rich," you are also in that moment broke and can't pay for the pizza. Not only will the pizza guy not take gold, you can't find s…

There’s still a big difference between being 10 cents short on your pizza bill and being $10 short.

Re: There have been 562 bank failures since 2000

#57

Post by tekla »

gnfargbl wrote: post #29
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?

There doesn't really seem to be any evidence of greater contagion, SVB is already gone.

Re: There have been 562 bank failures since 2000

#58

Post by beebmam »

mike_d wrote: post #52
arcticbull wrote: post #28

Earlier quoted context omitted.

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.

Almost all failed banks (including SVB) in recent history held more assets than deposits. Liquidity is the issue. Imagine you take your $10 million fortune and convert it all into gold bars and hide it under you bed. Then you order a pizza. When the pizza guy shows up, even though you are "rich," you are also in that moment broke and can't pay for the pizza. Not only will the pizza guy not take gold, you can't find s…

Except instead of just leaving, the pizza guy sues you and the state takes your gold bars under your bed and sells it to pay the pizza guy. Not saying this is a bad or good thing.

Re: There have been 562 bank failures since 2000

#59

Post by greenthrow »

mike_d wrote: post #52
arcticbull wrote: post #28

Earlier quoted context omitted.

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.

Almost all failed banks (including SVB) in recent history held more assets than deposits. Liquidity is the issue. Imagine you take your $10 million fortune and convert it all into gold bars and hide it under you bed. Then you order a pizza. When the pizza guy shows up, even though you are "rich," you are also in that moment broke and can't pay for the pizza. Not only will the pizza guy not take gold, you can't find s…

Your assertion about SVB does not match up with all the information out there, which indicates they do have a shortfall of at least $1.5B.

I don't know why HN seems to have locked into this meme that SVB does not have a shortfall. It does not reflect reality.

Re: There have been 562 bank failures since 2000

#60

Post by ezekg »

jvanderbot wrote: post #45
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?

Yes. SVB was the first bank failure since 2020.
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