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Bank Failures Visualized

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Re: Bank Failures Visualized

#91

Post by cde-v »

dimitrios1 wrote: post #84
llanowarelves wrote: post #70

Earlier quoted context omitted.

Evidently, the best way to run a bank is a 0% cash reserve minimum (as was granted to US banks starting during COVID), so you can make money off of literally every last penny, and then discourage and prevent customers from taking their money out, then [externalizing all costs]/[socialize losses] onto government (taxpayer) via bailout or customer via bail-in, while privatizing all profits in the meantime. And charge p…

> And charge poor people $30 every time they dip under $0 even by a penny. The list of large corporate banks that charge NSF fees and overdrafts is vanishingly small. OTOH, I know of plenty of credit unions that still do both.

> The list of large corporate banks that charge NSF fees and overdrafts is vanishingly small.

True for NSF fees, absolutely false for overdraft fees.

https://files.consumerfinance.gov/f/documents/cfpb_overdraft...

Re: Bank Failures Visualized

#92

Post by foota »

fisherjeff wrote: post #87
photochemsyn wrote: post #54

Earlier quoted context omitted.

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…

SVB and FRC did not “leverage themselves on risky speculation bets.” They made lots of very safe investments but did not adequately hedge against large and rapid rate increases. Also not good but it’s a big difference, IMO.

The only safe investment is a hedged investment, antthing else is up to your priors.

While interest rates going up as much as they did may have seemed unlikely, it was still irresponsible not to hedge their risk.

Re: Bank Failures Visualized

#93

Post by candiddevmike »

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…

Why are drug addicts not good bets? Coffee drinkers seem pretty successful?

Re: Bank Failures Visualized

#94

Post by candiddevmike »

echelon wrote: post #90
yalogin wrote: post #73

Weird part about this whole thing is, we have been repeatedly told that banks are good and they learned a lesson in 08. Now both tech and banking are in trouble again.

> we have been repeatedly told that banks are good and they learned a lesson in 08 This is a wholly different lesson. In 2008, banks were making bad investments. In 2023, the changing interest rate environment caused good investments to become worth less than their original value. If held to term, things would be fine, but liquidity issues put stress on the system. These are not the same, and we have better means of…

What lesson are they going to learn? Go big or go home? I don't foresee any kind of legislature becoming law over this, especially with our divided government.

Re: Bank Failures Visualized

#96

Post by senectus1 »

yieldcrv wrote: post #48
senectus1 wrote: post #32

Earlier quoted context omitted.

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-...

its kinda lite on details, but i guess "Cash and liquid crypto assets" says enough.

I think the claim they have "recovered 7.3 billion" is an overstatement... but time will tell.

Re: Bank Failures Visualized

#97

Post by PheeThav1zae7fi »

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…

[dead]

Re: Bank Failures Visualized

#98

Post by kortilla »

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…

This doesn’t work. The very failures we are seeing today are why this doesn’t work.

Why would someone leave their money in the regional bank offering 0.3% that all of their issued loans average barely above when people can take it to a bank offering 3% or get CDs offering that?

Community scale banks aren’t a solution for this.

Re: Bank Failures Visualized

#99

Post by JoeAltmaier »

Yes, yes, inflation changes things (a little) but the glaring result is, these bank failures are massive, significant and unprecedented.

We can find historical failures of adjacent institutions but clearly something new is happening?

Re: Bank Failures Visualized

#100

Post by fisherjeff »

foota wrote: post #92
fisherjeff wrote: post #87

Earlier quoted context omitted.

SVB and FRC did not “leverage themselves on risky speculation bets.” They made lots of very safe investments but did not adequately hedge against large and rapid rate increases. Also not good but it’s a big difference, IMO.

The only safe investment is a hedged investment, antthing else is up to your priors. While interest rates going up as much as they did may have seemed unlikely, it was still irresponsible not to hedge their risk.

Oh absolutely. My point was just that if you truly wanted to make a big risky bet, you would definitely not be going out and buying a bunch of agency bonds.
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