So basically, a ton of more failures in teh past, now it's slowed down but we are losing our stuff over it?
Bank Failures Visualized
51–60 of 424 posts
Re: Bank Failures Visualized
#52For 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?
Well, they're visualizing a dataset from the FDIC. So, it's more like it doesn't count due to a technicality. It's not clear to me if there's an "official" dataset that includes all non-FDIC institutions.
Re: Bank Failures Visualized
#53Community-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 r…
[deleted]
Re: Bank Failures Visualized
#54Community-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 r…
This is a rather skewed perspective that ignores the fact that if you have FDIC insurance for depositors then that can be gamed unless you have strict regulation of the banks:
> "The roots of the S&L crisis lay in excessive lending, speculation, and risk-taking driven by the moral hazard created by deregulation and taxpayer bailout guarantees."
https://www.investopedia.com/terms/s/sl-crisis.asp
This is why a lot of people worry that Silicon Valley Bank, First Republic, etc. might be the tip of an iceberg. If they've all leveraged themselves on risky speculation bets in the hopes that they'll get bailouts if it all goes sour (even though depositors greatly exceeded FDIC insurance limits) then you could have a domino situation.
Note also that it's a perfectly good way to run a bank as long as you don't get greedy and go for big risky bets, but the only way to ensure bank managers don't get the Las Vegas bug is to enforce the banking regulations in a fairly strict manner.
Re: Bank Failures Visualized
#55Community-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…
Credit Unions are better also because they are literally libertarian socialism. Imagine Uber with no shareholder class - as a cooperative, and so on. No one to extract rents from the two sides of the marketplace, the people themselves own the network.
So are housing cooperatives. They have low rent because there is no landlord class. Look at the Mitchell-Lama program in NYC, 30 years later they the most desirable and awesome apartments for the price, all around the city. Meanwhile next door the capitalist landlord-owned buildings are 3x as much for worse amenities.
https://en.wikipedia.org/wiki/Mitchell%E2%80%93Lama_Housing_...
The democratically-run city tries to fix this with rent control, but it's only some housing, and just a few mins ago we learned this:
https://www.nydailynews.com/new-york/ny-rgb-preliminary-vote...
Plus the government is notoriously bad at getting even the simplest stuff done:
https://therealdeal.com/magazine/national-july-2022/that-emp...
So yeah, I'm a libertarian socialist. People in the US hear socialism and they think of a big, oppressive government, but actually government is just as much if not more on the side of the capitalist, the industrialist... bailing out large banks and injecting trillions into corporate equity to prop up markets. In the 19th century they actually violently put down strikers, evicted people, operated debtor's prisons etc. which is why most libertarians back then were socialist. It was cool. Today that lefty libertarian stuff is mostly in Europe.
https://en.wikipedia.org/wiki/The_Soul_of_Man_Under_Socialis...
There are very few famous lefty libertarians today, people like George Carlin and Russel Brand maybe.
Re: Bank Failures Visualized
#56That 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.
You are correct. Additionally, the size of the bank(s) are not really what matters. I want to see the scale (sum) of what was actually lost when they went bankrupt, and how much we (the public) have to put up to keep the system from collapsing. Does anyone have an actual visualization of how much we ponied up to keep our banking system from collapsing? Did the public just provide a reasonable interest rate loan for a…
Generally speaking, it turns into free assets. The people involved usually don't acquire the assets/associated debt without some kind of guarantee.
OneWest Bank for example after 2008 had a guarantee where if the assets defaulted above a certain amount they would receive full value of the loans in a payout from the government. They were actively foreclosing on people to justify catastrophic losses to get the bailout. Not sure how that ended up since I was only marginally aware of the start of that and everything went silent once the news got wind of the perverse incentives.
In terms of trends, the bailout game has been played consistently since the the dollar went off the gold standard (1971 iirc).
The ponzi is starting to unwind now that inflationary pressures are out of control. I expect concentration to eventually lead to nationalization followed by a new currency which will fail because they lost all credibility from their mismanagement as a private entity.
That's what's happened historically with every country that debases its store of value above the point macro effects become noticable which are around 3:1 ratio).
Re: Bank Failures Visualized
#57For 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?
For this dataset, yes. It's only got deposit banks (afaict)
Re: Bank Failures Visualized
#58Is this inflation-adjusted to compare to 2008 dollars?
Would be cool to compare the dollar-of-fail as % of GDP at the time. Finance is all about ratio after all.
Re: Bank Failures Visualized
#59That 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.
You are correct. Additionally, the size of the bank(s) are not really what matters. I want to see the scale (sum) of what was actually lost when they went bankrupt, and how much we (the public) have to put up to keep the system from collapsing. Does anyone have an actual visualization of how much we ponied up to keep our banking system from collapsing? Did the public just provide a reasonable interest rate loan for a…
There's argument to be made that approximately any cost to keep the system from collapsing is a trade-off worth making if the alternative is the system collapsing.
Re: Bank Failures Visualized
#60Earlier quoted context omitted.
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 r…
This is a rather skewed perspective that ignores the fact that if you have FDIC insurance for depositors then that can be gamed unless you have strict regulation of the banks: > "The roots of the S&L crisis lay in excessive lending, speculation, and risk-taking driven by the moral hazard created by deregulation and taxpayer bailout guarantees." https://www.investopedia.com/terms/s/sl-crisis.asp This is why a lot of p…
What? How do depositor bailouts affect bank managers' incentives?