Pick 2009 as a starting date instead of 2000.
There have been 562 bank failures since 2000
71–80 of 139 posts
Re: There have been 562 bank failures since 2000
#72Yes just SVB. It was huge and we already know about WaMu.
Re: There have been 562 bank failures since 2000
#73I’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?
We don't know yet, we're slowly finding out who had exposure to what and how things are interconnected. It's a complicated machine and we'll probably know only after the fact. There's a lot of damage control messaging going on right now, and that actually makes me feel more bearish: All rumors are false until officially denied.
Right now we're dealing with the psychology of markets, if a large enough group of people get scared and want their money out, there's no amount of assurance that can stop that. They will only be appeased once they know their money is safe with them.
Re: There have been 562 bank failures since 2000
#74Earlier quoted context omitted.
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.
>They can't set the rules individually for each "problematic" bank. Can't they?
In principle, they can do whatever they want, but they already know SVB is not the only problematic bank - there's a whole pipeline of them; inventing individual bailout protocol for each would look ridiculous. My bet is that Fed's PhDs are desperately looking for a formula as we speak. That won't be easy. :-)
Re: There have been 562 bank failures since 2000
#75LMAO
Re: There have been 562 bank failures since 2000
#76Earlier 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?
You have stated Modern Monetary Theory precisely. Yes that is the new modern argument - government prints money, spends it on hospitals etc thus putting it in circulation and deletes it by taxation.
One HN comment == ten years of economic debate. :-)
Re: There have been 562 bank failures since 2000
#77Earlier 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?
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Re: There have been 562 bank failures since 2000
#78Earlier quoted context omitted.
Wouldn't it be better for congress to spend less? That's way better than raising taxes.
That doesn't address inflation. The point is that money needs to be taken out of the system. That used to be done by high tax rates on high incomes, and the estate tax. Both have basically been neutered. But all things considered, 5% is not really a high interest rate. People are just acting as if it's unreasonable because they'd become accustomed to ZIRP. Personally I hope rates stay above several percent for the fo…
Not spending takes it out of the system.
Re: There have been 562 bank failures since 2000
#79Earlier quoted context omitted.
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.
Yes they don't have a shortfall as long as there wasn't a bank run and they'd have time to unwind their long term bonds.
But they don't have time and did have a bank run, and therefore they do have a shortfall.
I think you might be able to argue that the bank itself had enough intrinsic value beyond it's ledger which could make up the shortfall, but that's all in the eye of the beholder who might want to buy them. We'll really see whether this is the case or not based on whether they have a new owner on Monday or they don't.
Re: There have been 562 bank failures since 2000
#80So I looked it up. As of September 30, 2022, there are 4,746 commercial banks in the US. That's 11.8% failure in 23 years. That includes 2008. Those banks total $23.6 trillion in assets. Looking at the tweet cited by ezekg, I'd eyeball that as about $1 trillion in assets in the banks that have failed in the last 23 years. So, 11.8% by number of banks, but only 4.2% by assets. That's still more than I thought. But the…
> But the real question is, of those $1 trillion in assets, how much did people actually lose, and how much did either the FDIC or a taking-over bank cover? Anybody have that number?
Zero.
Since the FDIC was founded, no depositor has lost a dollar of deposits in an FDIC-insured institution.
There are some non-deposit things that, if you squinted, looked a bit like deposits, and people have lost out on those.