651–660 of 889 posts
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You could have been digging ditches all these years Sam!
Im shocked i never heard of that movie until 5-6 years after it’s release. It’s on par with the Big Short in terms of telling a great story about the economic crisis.
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Matt Levine is fond of this highly relevant quote by Bagehot: “Every banker knows that if he has to prove that he is worthy of credit, however good may be his arguments, in fact his credit is gone.” It seems that CEOs of banks haven't learned anything since 1873 when this was observed.
> “Every banker knows that if he has to prove that he is worthy of credit, however good may be his arguments, in fact his credit is gone.” Is that terribly worded or is it just me? I figure it’s supposed to be poetic but I find it tedious. I think it could be simplified like this: “A banker who argues his creditworthiness has none.” I realize it’s a quote but holy shit.
Ugh. Give me a break.
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And an FDIC takeover and forced sale seems like a possible outcome here as well... But the entities that have more than $250K in the failed bank will likely lose some money. As I understand it, those who have over $250K will be issued stock in the new bank so they won't likely completely lose the amount over $250K, but it won't be as liquid as the cash they formerly had either.
> But the entities that have more than $250K in the failed bank will likely lose some money If anyone loses money in the SVB downfall, it is entirely the fault of the CEO/CFO for poor management. Depending on your monthly cash flow and your balances, anything over $100k should be kept in CDARS. It is explicitly designed to keep your cash spread out across banks limiting risk of default at a single institution and kee…
In the UK I have not heard of an equivalent scheme, but then again I am not dealing with accounts.
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> Pro tip: if you're CEO of a bank that's facing a bank run, don't tell the press that you'll be in trouble if everybody takes their money out. True, but isn't it possible that if he omitted this clarification, his statement about "ample liquidity" could be on shaky ground, from a legal perspective?
This is the classic, textbook dilemma that the CEO of a bank/crypto exchange faces. You can lie, and say everything is great. If enough people believe you, your bank is safe and you live happily ever after. If they don't believe you and pull their money, then you committed fraud and will go to court. Or you can tell the truth, and say everything will not be great if everyone pulls their money. Then people will defini…
In theory, a bank can borrow reserves from/via the Fed to fulfill redemption requests, so long as the Fed and other lenders in the financial system think the bank has a sound balance sheet (i.e., its assets, including the loans it has made, are truly worth more than its liabilities, including the deposit balances it owes to depositors). The Fed can never run out of money to lend; it creates it out of thin air to lend…
Tell me, when is the last time you went to the grocery store and they accepted a bank reserve? Bank reserves are useless. https://en.wikipedia.org/wiki/Eurodollar
This is like the prisoner's dilemma in real life. Best case situation is for no-one to withdraw. Reporting suggests SVB has a lot of reserves, but them trying to raise money suggests otherwise. Weird.
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A variant of Thatcher's "Being powerful is like being a lady, if you have to tell people you are, you aren't".
It's really amazing that both Thatcher and Reagan came to power at around the same time, delivered such fabulous witticisms, and caused very similar societal harm.
Thatcher won two landslide re-elections for a reason.
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>The FDIC insures deposits up to $250k Per depositor, per insured bank, per account category. It’s not that difficult to keep significant excess deposits insured.
... until you find out the FDIC itself has a weak reserve ratio against their insured accounts, meaning they will be as broke as everybody else in a systemic banking failure.
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It's really amazing that both Thatcher and Reagan came to power at around the same time, delivered such fabulous witticisms, and caused very similar societal harm.
UK before Tatcher was a depressed society with stagflation, rising crimes, crumbling infrastructure; that couldn't even clean its own streets. It was a society completely hamstrung by old unions that would happily collapse the economy in face of global competition, as long as their jobs gave the same pay - nominally. Thatcher won two landslide re-elections for a reason.
Arguably the reason was the war, not domestic policy [0]
[0] https://history.com/news/margaret-thatcher-falklands-war