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washparkhorn

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Everything posted by washparkhorn

  1. Killing off the local and regional banks hurts. The non-TBTF banks have a better understanding of the communities they serve. They promote local and regional economic development and job creation at a time when the US is re-shoring for more resilient supply chains—a national priority. Non-TBTF’s diversify risk and reduce concentration in the banking industry, which make the banking system more resilient and less prone to systemic risk. And we need the non-TBTF’s for price competition in our “capitalist” economy, ostensibly for lower costs and better service. Yellen and Powell - like their predecessors - protect the boys.
  2. Matt Stoller (pro-enforcement of antitrust laws) may be right: https://mattstoller.substack.com/p/fire-the-fed
  3. Silverado Savings and Loan was the OG of the SI failures
  4. The Fed’s QT appears to have come to a close—as expected. The Fed Put has returned.
  5. The vc bros and their depositors (you know—the ones who say “learn to code” when they break things and people lose their jobs) weren’t bright enough to protect their deposits with insured cash sweeps—a fintech invention that has be around since the mid-2000’s. So we socialized their losses with two trillion in liquidity. The least they could do is say thank you.
  6. I am in the middle of The Passenger and have Stella Maris cued up. I love the book and the writing. It’s not the easiest Cormac work to read and I would not suggest it to anyone new to his writing style, but it is worth the wait. I think of Blood Meridian and Suttree as his finest works. For me as a Father of three, The Road feels personal. We cast our children into a hostile world and hope we prepared them for it. To wit: “What's the bravest thing you ever did? He spat in the road a bloody phlegm. Getting up this morning, he said.”
  7. Just a reminder on brrrrt . . . In order to bailout the financial system and reckless wealthy depositors, the Fed has injected 2 trillion in available liquidity.
  8. The Nash Equilibrium on bank runs (game theory) indicates spooked SVP depositors acted irrationally. Under the Diamond-Dyvbug model of bank runs, perfect rationality is presumed. Neither the bank nor the depositors acted rationally. Everyone with half a brain understands the deposit limits for FDIC insurance, but SVG failed to hedge the risk of a run and depositors failed to use well-known “Insured Cash Sweeps” for deposits in excess of $250,000. Rewarding those poor decisions creates perverse incentives and moral hazard. Those fanning the fears of additional bank runs in the wake of SVG (to force bailouts of those poor choices) created additional damage and negative externalities that may be actionable. Those benefiting from “yelling fire in a crowded theater” deserve scrutiny from regulators.
  9. Odds of anyone being held accountable?
  10. FDIC Insured cash sweeps were available prior to the SVP bank run. Well run operations paid for this service/insurance because it limited exposure to bank runs (and paid interest). Faux libertarians billionaires sought to nullify the adage—Fools and their money are soon parted. The older idiom—He who has the money makes the rules—always wins.
  11. Bailout. The word is bailout, not "insurance". There is no backwards insurance. ~Ayn Rand, probably.
  12. Tech bros be like:
  13. Self-reinforcing power structures are inherently fragile and prone to exploitation.
  14. Meanwhile, 14 million children, women and men will begin losing Medicaid coverage at the end of the month. https://www.kff.org/medicaid/issue-brief/10-things-to-know-about-the-unwinding-of-the-medicaid-continuous-enrollment-provision/
  15. Real men of genius . . .
  16. SVB was in an investment duration world of its own— This isn’t existential risk unless someone triggers a bank run. I want to know who the short sellers are and what gasoline they were spreading and sparking.
  17. Short sellers whisper Sparking runs through social screens Banks tremble in fear
  18. One other tidbit. The FDIC will/have asked the SVB employees to stay on as the bank is wrapped up. Typically, these employees are paid at 150% of normal pay given the need for their familiarity with the business (and the long hours).
  19. Thiel deserves scrutiny of his trades after prompting the run. Again, uninsured depositors will be made whole or close to whole. SVB had assets (poorly structured for duration risk). FDIC will make funds available for insured account holders early next week. Uninsured accounts will gain access incrementally as assets are secured. That could be early next week as well. The FDIC is not expected any tax dollars on this bank failure. The sticky wicket for startups will access to ongoing credit. SVB understood the game and a JPMorgan-type will not.
  20. The FDIC will ensure an orderly sale of assets and pay non-FDIC insured depositors. Once the FDIC establishes the value of SVB’s assets (this weekend) depositors will have access to funds for business needs. The FDIC knows what it is doing. Thiel triggered this bank run. SVB officers and directors ham-handily rolled out a rescue plan that caused Thiel to panic. The bank made some shitty bets in a rising interest rate environment. Tech prospered in the free money regime; that regime is dead. Time to break the old mindset and catch-up with the new boss. And ffs, diversify and hedge. SVB was living in a fantasy world that crashes with the New Fed.
  21. Moral hazard remains a problem for financial engineers. Tech bros: “Ours!”
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