I don't quite get like this is making the front page of HN. Banking system working as intended, FDIC doing a great job like normal.
Adjusted for inflation is this in the top 10 versus the 80s?
According to wikipedia, second largest by assets:
https://en.wikipedia.org/wiki/List_of_largest_bank_failures_...
I haven't researched this thoroughly, but I think the banking sector (like many other sectors) has been concentrating a lot over the years. So in the 80s we had many small bank failures, and in 2008-2010 we had many many small+medium bank failures (+WaMu, the largest in US history), and today we have a few large bank failures (so far).
Right, but the concentration isn't a bad thing just because it is concentrated. It might just be a reflection of the changing nature of the world (globalization, finance changes, etc).
I checked, and currently, there are 4,844 banks in the USA. There are also 4,759 credit unions, but I am not sure if that is also included in the bank numbers.
They did perfectly. The bank failed to manage risk. And consumers fled.
The FED created this environment and did it for a good reason to head off inflation.
Did you want the FED to not slow/stop inflation?
There are 4,000+ banks in the USA. Seems ok. Congress can also pass better laws to max size banks if they are concerned.
The whole banking sector is down. You still think this only affects “badly run banks”? Or maybe monetary policy by this administration has been abysmal, from initially denying there was real inflation, to continuing to sign giant spending bills and refusing to do nearly anything to stop inflation aside from one of the crudest tools and at the same time forcing banks to buy these long term t-bills because 3 years ago it was seen as a safe bet and the least risky move.
This affects all banks, as it changes the financial environment. Well-run banks will manage it well. Badly run banks will close.
The Fed was faced with a choice, fight inflation or not. They choose correctly, and that has ripple effects. That is life. Some banks were prepared and managed their risk well; others did not. And some are probably getting unlucky because SVB really screwed up and now people are keeping their money under the F.D.I.C. insurance level because of their bad management.
(inflation isn't so simple as printing money; it also had to do with companies taking advantage of the cover to raise prices, problems with global logistics delays and higher shipping prices, and a lot more. It is a very complex issue and not so simple.)
The Fed administration? I've never heard it called that. Are you from the USA?
Can you tell me your background in economics? I'd like to understand your expertise and why you think you know better than the brilliant people at the FED who do nothing but think about this and analyze data :). That doesn't mean they are perfect, but they are historically pretty good at their job and constantly improving.
FRB was solvent and had plenty of liquidity if the FDIC didn't force kill it. The FDIC just wanted to flex its muscle because it didn't like the situation — but there was zero reason FRB couldn't have held all its good loans to maturity and been totally fine.
Fuck the FDIC and fuck Jerome Powell for causing all this unnecessary destruction.
This is totally incorrect. Face value and market value are a material difference when one faces a liquidity crunch. First Republic was in a slow death spiral for months, and everyone across its capital structure knew it for at least a week.
> there was zero reason FRB couldn't have held all its good loans to maturity and been totally fine
You can’t tell depositors you won’t give them their money for ten years.
Tis but a scratch...come back and I'll bite your legs off ;)
How is this bank fine? They have lost confidence and everyone is pulling their money out. They would collapse if not for FDIC insurance and the system stepping in.
The Fed put in a facility that was supposed to let banks borrow against their securities portfolio at their book value and not at their market value, plus on top of that there's also the discount window facility, which means FRB had plenty of access to capital to handle any withdrawals.
The FDIC is just on a power trip here. They don't _like_ that the market value of those securities is down based on the inverse relationship between yields and price. So they force killed the bank. There was ZERO need to do that, FRB could have just held the loans to maturity, and sure they'd lose some money on the interest they'd have to pay to borrow from the Feb to make up for lost deposits, but in no way were they insolvent and in need of a shut down.