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hendrix81 t1_jcb2x83 wrote

Fo you believe the Swiss government will bail out credit suisse? Do you believe European banks will have any interest in preserving the bond market or will they sacrifice the us dollar for thier own health?

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SockPuppetsUnite45 t1_jcb5ro2 wrote

Does this mark the beginning of the end for bank deregulation legislation that is framed as ‘right sized or tailored regulation’?

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politico OP t1_jcb7cyz wrote

Unlikely. Tailoring as a broad and general concept is something that seems pretty logical: a community bank with less than $1 billion in assets and does mostly just basic lending shouldn't face the same type of regulations as a megabank with $3 trillion in assets. How exactly that all shakes out is very complicated (and, as you implicitly suggest, offers a lot of room for mischief). But certainly, this has likely made both lawmakers and regulators much less sympathetic to arguments from banks, say, between $100 billion and $250 billion in size, that they don't pose risks to the economy.

- Victoria

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boazg t1_jcb9z8s wrote

Are we expecting a chain reaction of more banks collapsing due to the global nature of panic these days?

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politico OP t1_jcbbegz wrote

The Fed has intervened to insulate open banks against liquidity concerns related to the open banks. Preventing a contagion likely played a role in invoking these systemic risk authorities for banks that are otherwise not central to the financial system. Crisis-fighters largely lost their authorities after the 2008 financial crisis to protect individual banks from contagion without first closing them. So, responding so forcefully to these relatively insignificant banks' failures so forcefully hopefully limits contagion to any banks that may actually be more prone to spreading financial wildfire.

the other thing worth noting is that this has primarily been a run on one kind of business model: banking tech/VC/Silicon Valley - which itself is facing belt-tightening as the Fed has raised interest rates steeply. We have not seen signs of contagion large, diversified banks - which are actually experiencing deposit inflows.

-Steven

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jh937hfiu3hrhv9 t1_jcbclz0 wrote

What are SVB's assets?

Does the depositer's refund come from bank reserves or the FDIC?

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politico OP t1_jcbdk2f wrote

SVB's assets are largely longer-term Treasuries and government-backed mortgage securities. These securities have little risk of loss if they're held to maturity, but they lost paper value as interest rates increased - so when SVB lost deposits and had to sell assets, they had to bear those losses.

While depositors have immediate access to their funds—which may needed to be funded in the short-term by the FDIC—the FDIC will only lose money if its sale of the assets (and/or liabilities) of SVB is less than enough to cover all the depositors. And, if the FDIC's insurance fund dips below what it determines to be sufficient coverage for the system - it will levy the banking system for the shortcoming.

- Steven

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politico OP t1_jcbe18b wrote

Sam here: They've also got a loan book that a lot of private equity firms are reportedly circling.

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jh937hfiu3hrhv9 t1_jcbeq6j wrote

So their assets are crap and nobody will buy them but the FDIC and taxpayers are bailing out banks again. Cool.

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politico OP t1_jcbf2ps wrote

Nah, they've got a lot of good assets. But the real reason another bank would want to buy them is relationships with all those customers (a big chunk of whom are tech startups). - Victoria

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jh937hfiu3hrhv9 t1_jcbjulf wrote

What are the startups besides apps to extract and sell personal information to advertisers?

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Longjumping-Ease-353 t1_jcbdlwg wrote

How can financial journalism be improved to prevent future black swan events? Like Enron, theranos, maddoff, SBF, we work, Lehman bros and SVB ?

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politico OP t1_jcbeyxa wrote

Sam here: Great question. Victoria and I were talking about it offline. On the one hand the Theranos story was a product of tremendous journalism.

With that said, a lot of it has to do with building up knowledge around finance, markets, regulation, policy etc. That takes time and commitment to the profession. The other thing to remember is that the media landscape's wider and thinner than it was when there were multiple daily papers competing for the same market. Markets are much larger, but journalism's shrunk. Time and investment is the only way that improves.

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