Bank failures

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vnatale
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Bank failures

Post by vnatale » Sun May 14, 2023 3:22 pm

Bank failures

https://observablehq.com/@mbostock/bank-failures

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Re: Bank failures

Post by coasting » Sun May 14, 2023 5:47 pm

That's quite the snowman profile on the right side!
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Re: Bank failures

Post by coasting » Sun May 14, 2023 6:19 pm

coasting wrote:
Sun May 14, 2023 5:47 pm
That's quite the snowman profile on the right side!
Also, I was wondering where is Silvergate bank on the list for 2023? I know it wasn't very big compared to the other three, but was as big as a few others on the list from earlier years. Apparently, while it was FDIC insured, it was a voluntary shutdown, so I guess it does not technically count as a "failure". Cool chart.
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Re: Bank failures

Post by vnatale » Sun May 14, 2023 6:32 pm

coasting wrote:
Sun May 14, 2023 6:19 pm

coasting wrote:
Sun May 14, 2023 5:47 pm

That's quite the snowman profile on the right side!

Also, I was wondering where is Silvergate bank on the list for 2023? I know it wasn't very big compared to the other three, but was as big as a few others on the list from earlier years. Apparently, while it was FDIC insured, it was a voluntary shutdown, so I guess it does not technically count as a "failure". Cool chart.


Thought they failed it does not look like they cost anyone anything?

https://www.cnn.com/2023/03/08/business ... index.html

Crypto-friendly lender Silvergate collapses

Crypto-focused lender Silvergate said it is winding down operations and will liquidate the bank after being financially pummeled by turmoil in digital assets.

“In light of recent industry and regulatory developments, Silvergate believes that an orderly wind down of Bank operations and a voluntary liquidation of the Bank is the best path forward,” it said in a statement Wednesday.

The bank’s plan includes “full repayment of all deposits,” it said.
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Re: Bank failures

Post by vnatale » Sun May 14, 2023 7:51 pm

Jamie Dimon Warns Regulators To Not 'Overreact' To Bank Crisis

https://www.fa-mag.com/news/jamie-dimon ... -222662257

Jamie Dimon said it’s time for regulators to help put an end to turmoil in the banking industry, but he’s already predicting policymakers will take away the wrong lessons from this year’s upheaval.

“I think it’s going to get worse for banks — more regulations, more rules, and more requirements,’’ JPMorgan Chase & Co.’s chief executive officer said in a Bloomberg Television interview from Paris Thursday. “If you overdo certain rules, requirements, regulations — there are some of these community banks that tell me they have more compliance people than loan officers.’’


The only major bank CEO from the financial crisis still in command, Dimon has played a central role in the reaction to the industry’s worst period of tumult in more than a decade. He brought his typical blunt style to critiques of regulators and fellow bankers, spearheaded an industry lifeline to First Republic Bank and ultimately stepped in to buy the lender last week when those efforts proved insufficient.

“We need to finish the bank crisis,’’ Dimon said. “Whatever the FDIC, the OCC, the Fed — whatever they need to do to make it better they should do.”

Four regional firms have collapsed amid steep Federal Reserve interest-rate hikes and deposit outflows. JPMorgan’s purchase of First Republic and Dimon’s declaration that “this part of the crisis is over” did little to quell investor concern about the strength of the industry. The KBW Regional Banking Index has dropped 12% since that deal was announced.

Banks should have been encouraged to look at a broader range of potential pitfalls, rather than one annual stress test that ran hundreds of thousands of pages, breeding a "false sense of security,” Dimon said. The Federal Reserve itself wasn't predicting interest-rate rises before it started hiking, and then was surprised when banks also got caught wrong-footed.

Dimon said regulators need to get a better handle on smaller banks’ financial situations, to “not be surprised constantly.”

While blame should be placed at the feet of bank CEOs and boards of directors, “I think there needs to be humility on the part of regulators,’’ Dimon said. “They should look at it and say, ‘OK, we were a little bit a part of the problem’ as opposed to just pointing fingers.’’

Despite the upheaval, the regional-bank industry is “quite strong,” he said, and “hopefully we’re getting near the tail end” of the problem.

He joined a chorus of
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Re: Bank failures

Post by vnatale » Sun May 14, 2023 7:54 pm

JPMorgan, First Republic And The Curse Of The Second Best

https://www.fa-mag.com/news/jpmorgan--f ... -222662257

MAY 1, 2023 • MOHAMED A. EL-ERIAN

Lots will be written on the rise and fall of First Republic Bank. Its customer service was legendary in the banking system, as was its list of rich clients with ample deposits and a healthy appetite for issuing jumbo mortgages to highly creditworthy borrowers. Yet it went from being admired to being seized by regulators and sold to another bank.

What emerged on Monday morning was far from perfect, despite weeks of discussions and posturing. What we have are US government institutions caught up in the policy implications of a “second best” world — that is, the repeated inability to come up with an optimal solution. What’s emerged will come with collateral damage and unintended consequences.


First Republic found itself in a similar situation to Silicon Valley Bank, which was shut down by regulators in March. Its failure to manage an interest rate mismatch on its balance sheet ultimately crippled it as deposits flew out the door in response to the earlier bank failures. Its vulnerability was amplified by the Federal Reserve’s initial mischaracterization of inflation as transitory, the failure to take timely measures, and the inevitably highly concentrated set of hikes that followed.

The inevitable assessments of First Republic’s failure are also likely to point to significant lapses in bank supervision and regulation — the type of failures that were detailed last Friday in a report by the Fed that, refreshingly and encouragingly, saw the central bank finally take ownership of a mistake and seek to learn from it. Unlike other major central banks, it had repeatedly failed to do so when it comes to monetary policy.

First Republic became increasingly fragile as the contraction in deposits worsened funding costs, deepened a capital hole, and plummeted its stock price by around 95%. That was the bad news. The good news was that, at least on paper, there was a constructive alignment of incentives among the main actors in the bank resolution process.

Having already lost three institutions, the banking system as a whole desperately needed an orderly resolution for First Republic that minimized the risk of further disruptions. This was not just the case for regional and community banks where the risks of flighty deposits and duration mismatches were under a bright spotlight. It was also the case for the 11 larger banks as they had injected tens of billions of deposits into First Republic in an earlier attempt to stabilize the situation.

It was also the case for regulators, especially the Federal Deposit Insurance Corp. and the Fed. The FDIC wanted to avoid being on the hook for financial losses and having to dispose of yet another bank’s assets and liabilities; and the Fed did not want to trigger yet again the “systemic risk” clause to allow for an extension of deposit insurance to theoretically uninsured deposits. The Fed was also keen to keep the door open for the policy “separation principle” that has interest rate policy aimed at inflation reduction and other tools used for financial stability.

Despite this alignment, it took weeks for a solution to emerge. And when it did, it involved unfavorable spillovers, as well as having one of the nation’s biggest and most dominant bank — JPMorgan — becoming even more so. With this comes the further evolution of the largest financial institutions from major sources of systemic risk to stabilizers of the system itself. Moreover, and also departing from the previous conventional wisdom, the bigger and more diversified banks are now being considered “safer” than the narrow banks which have either no or a very limited range of capital market activities that have traditionally been viewed as a source of financial stability risk.

The solution that emerged early Monday morning deals with the immediate threat of a disorderly failure of First Republic and, therefore, does not fuel the already uncomfortable risk of possible additional disruptions to other regional and community banks. Yet the potential collateral damage and the unintended consequences are far from immaterial. Four stand out in particular.

First, the US now has a more concentrated banking system, with what was once viewed not so long ago as “too big to fail”/”too big to manage” banks becoming larger.

Second, there is even greater doubt about the nature of the de facto deposit insurance system in place.

Third, the compositional risk within the banking system of less credit extending into the economy will continue, potentially aggravating the headwinds to high and inclusive growth.

Finally, the total cost of First Republic’s resolution remains to be assessed, including how the burden be shared among the public and private sectors and, with that, the extent of the “bailout” for the 11 banks that had large deposits with First Republic.

The US economy continues to suffer from too many years of easy money, and the subsequent mishandling of the rate hiking cycle and lapses in supervision and regulation. With that comes the ever-present risk of collateral damage and unintended consequences given that first best policy responses are no longer available.

Mohamed A. El-Erian is a Bloomberg Opinion columnist. A former chief executive officer of Pimco, he is president of Queens’ College, Cambridge; chief economic adviser at Allianz SE; and chair of Gramercy Fund Management. He is author of “The Only Game in Town.”
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Re: Bank failures

Post by coasting » Sun May 14, 2023 8:33 pm

vnatale wrote:
Sun May 14, 2023 6:32 pm
Thought they failed it does not look like they cost anyone anything?
If by anyone you mean depositors, yes that's true - they were made whole by the bank itself.
“In light of recent industry and regulatory developments, Silvergate believes that an orderly wind down of Bank operations and a voluntary liquidation of the Bank is the best path forward,” it said in a statement Wednesday.
In March, the FDIC showed up and "helped" management see this was the best path forward - an orderly wind down of Silvergate Bank and they were not actually taken into receivership by FDIC. I think this is why it is not in the chart of bank failures you linked to. Filing last week states the parent company Silvergate Capital is to be delisted from the NYSE. The stock (SI) once traded over $200, now around a buck, so it has cost the equity holders something!
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Re: Bank failures

Post by boglerdude » Sun May 14, 2023 9:47 pm

Age of Easy Money | FRONTLINE https://www.youtube.com/watch?v=EpMLAQbSYAw

Not much we dont know in there. Funny seeing Left-leaning Frontline come out with this now, after a decade of financial repression

"Jeremy Grantham, Co-founder , GMO LLC: we've been trained to believe that the fed is on our side. If we make a bet in the market, and we win, we're on our own. We get to keep the profits. If we lose, they will bend every effort and every dollar they can get their hands on, one way or another to bail us out. This is asymmetry of the most splendid kind."
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Re: Bank failures

Post by vnatale » Mon May 15, 2023 7:53 am

coasting wrote:
Sun May 14, 2023 8:33 pm

vnatale wrote:
Sun May 14, 2023 6:32 pm

Thought they failed it does not look like they cost anyone anything?

If by anyone you mean depositors, yes that's true - they were made whole by the bank itself.

“In light of recent industry and regulatory developments, Silvergate believes that an orderly wind down of Bank operations and a voluntary liquidation of the Bank is the best path forward,” it said in a statement Wednesday.

In March, the FDIC showed up and "helped" management see this was the best path forward - an orderly wind down of Silvergate Bank and they were not actually taken into receivership by FDIC. I think this is why it is not in the chart of bank failures you linked to. Filing last week states the parent company Silvergate Capital is to be delisted from the NYSE. The stock (SI) once traded over $200, now around a buck, so it has cost the equity holders something!


Yes. It is supposed to cost the shareholders. But it did not cost the FDIC or cost any government $$$$. Looks like not even creditors?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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