2023 bank failures

[gsoda3 3246]

6 minutes ago, Jackson P. Neighbors said:

And the race is on. Is Goldman handling the capital raise? Worked out well last time.

Seems like those deposits are going to get insured one way or another. Community bank to GSIB to Regional bank to FDIC bridge bank isn't the most efficient method, but whatever works.

didn't say who but i'll be surprised if it's solely GS. i'm expecting wording along the lines of "a consortium lead by GS" or something similar.  existing relationships still count for something.  

[gsoda3 3246]

and now USB looks to be straight up buying credit suisse.

[Jackson P. Neighbors 136]

21 minutes ago, gsoda3 said:

didn't say who but i'll be surprised if it's solely GS. i'm expecting wording along the lines of "a consortium lead by GS" or something similar.  existing relationships still count for something.  

Biding a little time before a sale is announced?

FRB has a very different business model than SB and SVB so its just ugly all around.

[Hefeweizen 5310]

16 hours ago, gsoda3 said:

and now USB looks to be straight up buying credit suisse.

I think the Swiss regulators are twisting their arm to do it.  The fallout from SVB is going to reverberate for a while but CS looks like a different matter.  It was a little funny that Saudi caused this issue by refusing to give them any more money.

[bernorange 8359]

19 hours ago, DefinitelyNotHollywoodColt said:

... They took that free money and handed it to banks. ...

Not all the banks.

Feds: Do you support crypto markets?

Signature Bank: Yes

Feds: Furtive Movements! Stop Resisting!

---

Feds: Do you support crypto markets?

First Republic: No

Feds: Allow us to give you a ride home.  Would you like some cold cuts with Grey Poupon?

[Mullet Free 40]

On 3/16/2023 at 11:21 PM, gsoda3 said:

Accessing the discount window isn't a bailout. It's a short term collateralized loan used whenever there's a liquidity issue and suitable credit isn't found. The loans are always backed up by assets and the terms are renewed every day. There's a stigma to using it because people wonder why they can't find a suitable interbank loan- is it because no one wants to lend to you or is it because no one else has the capacity?

Got it. Misread that. I did see it essentially matched in 2023 dollars the usage at peak in 2008. 
 

FWIW $12B of that usage was the emergency loan program they just set up. 

[Mullet Free 40]

Things must be pretty bad if they’re calling grandpa. 
 

 

 

[Schulz2.0 28951]

55 minutes ago, Mullet Free said:

Things must be pretty bad if they’re calling grandpa. 
 

 

 

Are we pretending that zero hedge isn't a completely biased "source?"

[Mullet Free 40]

3 minutes ago, Schulz2.0 said:

Are we pretending that zero hedge isn't a completely biased "source?"

They are, they’re just a prolific account that shares a lot of news so they’re easY to link. 
 

Better?
 

 

 

 

[Mullet Free 40]

 

 

[TwiceHorn 31438]

On 3/15/2023 at 1:23 PM, Beau Vine said:

It's like a lawyer getting a case thrown out for misnumbering exhibits.

Actually, it's kinda not.  There's no class on numbering exhibits in law school.  Hell, for the most part there's no talk of the actual handling of exhibits at all.  In most firms, that's not even handled by lawyers, rather paralegals.

When you get into the practice of law, though, sometimes you encounter people that may be great or good at some of the lawyering stuff, like arguing or writing, but are so practically bereft as to not have the foggiest notion how to attach exhibits or even support their admissibility.

[TwiceHorn 31438]

This crossed my google feed.  Some turd burglar from IBD tries to blame the gay, female "woke" president of the SF Fed for not adequately supervising SVB.  Ignoring the repeal of Dodd-Frank's mandate of supervision of SVB and similar-sized banks from such supervision.

https://nypost.com/2023/03/17/why-woke-frisco-fed-chief-missed-silicon-valley-banks-warning-signs/

The comments are frightening.  I know it's Fox News II Electric Boogaloo, but Christ.

Edited March 19, 2023 by TwiceHorn
besthugecocks

[Not a cat 5652]

1 hour ago, TwiceHorn said:

This crossed my google feed.  Some turd burglar from IBD tries to blame the gay, female "woke" president of the SF Fed for not adequately supervising SVB.  Ignoring the repeal of Dodd-Frank's mandate of supervision of SVB and similar-sized banks from such supervision.

https://www.cnbc.com/2023/03/16/microsoft-to-improve-office-365-with-chatgpt-like-generative-ai-tech-.html

The comments are frightening.  I know it's Fox News II Electric Boogaloo, but Christ.

Wrong link but at least it's not about getting pegged.

[atomheartbevo 89628]

18 minutes ago, Not a cat said:

Wrong link but at least it's not about getting pegged.

Ummm...you didn't read the story and see the upcoming changes for ChatGPT-5 did you?

Quote

GPT-5 has enhanced capabilities in:

• Advanced reasoning
• Complex instructions
• Pegging videos using characters generated from the comments and photos of your family from their social media accounts.
• More creativity
• More human-like responses.

 

Edited March 19, 2023 by atomheartbevo

[David Busters 22]

Are they more Woke than other backs? With their board or their policy? I heard they might have been. But I do not know very much about banks

I guess time will tell.

[atomheartbevo 89628]

[DalTxHornFan 3097]

Asset/Liability maturity matching is Banking 101.  I'm not sure exactly what happened here, but it is a major (and very predictable) fuck up in the current interest rate environment.  The over classification of so much of their assets as HTM hid their huge embedded losses.  I don't think that it would have taken the "stress test" to identify this risk.

[Handcruser 2805]

Actually, it's kinda not.  There's no class on numbering exhibits in law school.  Hell, for the most part there's no talk of the actual handling of exhibits at all.  In most firms, that's not even handled by lawyers, rather paralegals.
When you get into the practice of law, though, sometimes you encounter people that may be great or good at some of the lawyering stuff, like arguing or writing, but are so practically bereft as to not have the foggiest notion how to attach exhibits or even support their admissibility.

How about Aggy law school?

[Dahobbs 17526]

3 hours ago, Handcruser said:

How about Aggy law school?

That's more crayons and color by number. Also, some light glue eating.

 

[Incredulity 11654]

9 hours ago, DalTxHornFan said:

Asset/Liability maturity matching is Banking 101.  I'm not sure exactly what happened here, but it is a major (and very predictable) fuck up in the current interest rate environment.  The over classification of so much of their assets as HTM hid their huge embedded losses.  I don't think that it would have taken the "stress test" to identify this risk.

It’s been reported that SVB would have passed a stress test.  

[babysdaddy 2719]

What Dodd frank regulations were rolled back and how would they have helped stop the collapse of svb?

[Schulz2.0 28951]

11 minutes ago, babysdaddy said:

What Dodd frank regulations were rolled back and how would they have helped stop the collapse of svb?

Are you asking how to use Google?

[wackawacka 177]

23 minutes ago, babysdaddy said:

What Dodd frank regulations were rolled back and how would they have helped stop the collapse of svb?

it changed the threshold from $50b in assets to $250b

12 hours ago, Mullet Free said:

 

 

this was predictable and comical how the regulators have backed themselves into this corner.

[Schulz2.0 28951]

13 hours ago, Mullet Free said:

They are, they’re just a prolific account that shares a lot of news so they’re easY to link. 
 

Better?
 

 

 

 

Yes, Bloomberg is a much better source than Zero Hedge.

[wackawacka 177]

Every national retailer wants a banking licenses but blocked due to political reasons. Let retails (e.g., Amazon/Walmart) buy these regional banks.

Edited March 19, 2023 by wackawacka

[Nivek 16923]

30 minutes ago, wackawacka said:

it changed the threshold from $50b in assets to $250b

this was predictable and comical how the regulators have backed themselves into this corner.

Oh, the regulators did this?  mount up.

[wildcat09 29346]

On 3/18/2023 at 8:51 AM, bernorange said:

Not all the banks.

Feds: Do you support crypto markets?

Signature Bank: Yes

Feds: Furtive Movements! Stop Resisting!

---

Feds: Do you support crypto markets?

First Republic: No

Feds: Allow us to give you a ride home.  Would you like some cold cuts with Grey Poupon?

This is the way.

[babysdaddy 2719]

Are you asking how to use Google?

So you don’t know and can’t articulate why. “Changing the threshold from 50b to 250b” isn’t an answer either.

[Aqua Buddha 14582]

13 hours ago, TwiceHorn said:

This crossed my google feed.  Some turd burglar from IBD tries to blame the gay, female "woke" president of the SF Fed for not adequately supervising SVB.  Ignoring the repeal of Dodd-Frank's mandate of supervision of SVB and similar-sized banks from such supervision.

https://nypost.com/2023/03/17/why-woke-frisco-fed-chief-missed-silicon-valley-banks-warning-signs/

The comments are frightening.  I know it's Fox News II Electric Boogaloo, but Christ.

Turns out he's wrong.  (Stunned, I know.)  They were under supervision for over a year.  I'm sure he'll post a retraction:

https://www.nytimes.com/2023/03/19/business/economy/fed-silicon-valley-bank.html

WASHINGTON — Silicon Valley Bank’s risky practices were on the Federal Reserve’s radar for more than a year — an awareness that proved insufficient to stop the bank’s demise.

The Fed repeatedly warned the bank that it had problems, according to a person familiar with the matter.

In 2021, a Fed review of the growing bank found serious weaknesses in how it was handling key risks. Supervisors at the Federal Reserve Bank of San Francisco, which oversaw Silicon Valley Bank, issued six citations. Those warnings, known as “matters requiring attention” and “matters requiring immediate attention,” flagged that the firm was doing a bad job of ensuring that it would have enough easy-to-tap cash on hand in the event of trouble.

But the bank did not fix its vulnerabilities. By July 2022, Silicon Valley Bank was in a full supervisory review — getting a more careful look — and was ultimately rated deficient for governance and controls. It was placed under a set of restrictions that prevented it from growing through acquisitions. Last autumn, staff members from the San Francisco Fed met with senior leaders at the firm to talk about their ability to gain access to enough cash in a crisis and possible exposure to losses as interest rates rose.

[Aqua Buddha 14582]

1 hour ago, wackawacka said:

Every national retailer wants a banking licenses but blocked due to political reasons. Let retails (e.g., Amazon/Walmart) buy these regional banks.

[Auto Driller 2504]

3 minutes ago, Aqua Buddha said:

Turns out he's wrong.  (Stunned, I know.)  They were under supervision for over a year.  I'm sure he'll post a retraction:

https://www.nytimes.com/2023/03/19/business/economy/fed-silicon-valley-bank.html

WASHINGTON — Silicon Valley Bank’s risky practices were on the Federal Reserve’s radar for more than a year — an awareness that proved insufficient to stop the bank’s demise.

The Fed repeatedly warned the bank that it had problems, according to a person familiar with the matter.

In 2021, a Fed review of the growing bank found serious weaknesses in how it was handling key risks. Supervisors at the Federal Reserve Bank of San Francisco, which oversaw Silicon Valley Bank, issued six citations. Those warnings, known as “matters requiring attention” and “matters requiring immediate attention,” flagged that the firm was doing a bad job of ensuring that it would have enough easy-to-tap cash on hand in the event of trouble.

But the bank did not fix its vulnerabilities. By July 2022, Silicon Valley Bank was in a full supervisory review — getting a more careful look — and was ultimately rated deficient for governance and controls. It was placed under a set of restrictions that prevented it from growing through acquisitions. Last autumn, staff members from the San Francisco Fed met with senior leaders at the firm to talk about their ability to gain access to enough cash in a crisis and possible exposure to losses as interest rates rose.

I think we all know why nothing was done despite adequate warning signs. The executives and large account holders at SVB ran in the right social circles and possibly/probably donated to the right politicians. Regulators never fuck with “their people”. It’s pretty reliable that the only ones who are consistently under scrutiny are the poors.

[Schulz2.0 28951]

9 minutes ago, babysdaddy said:

So you don’t know and can’t articulate why. “Changing the threshold from 50b to 250b” isn’t an answer either.

All of about 15 seconds on Google.

https://abcnews.go.com/Politics/trump-era-rollback-bank-rules-after-silicon-valley/story?id=97852603

[wackawacka 177]

Quote

UBS has agreed to buy Credit Suisse after increasing its offer to more than $2bn, with Swiss authorities poised to change the country’s laws to bypass a shareholder vote on the transaction as they rush to finalise a deal before Monday.

The all-share deal between Switzerland’s two biggest banks is set to be signed as soon as Sunday evening and will be priced at a fraction of Credit Suisse’s closing price on Friday, all but wiping out the target’s shareholders

 

[4th and 5 4914]

On 3/15/2023 at 11:43 AM, crash_davis said:

Last night Frontline on PBS had a great documentary on how free money for the last 2 decades got us here. Must watch. Spoiler alert. This is just the start of a long overdue bill. Whoda thunk decades of free money and everyone and everything leveraged to the max would be a good thing?

https://www.pbs.org/wgbh/frontline/documentary/age-of-easy-money/

definitely worth watching, thanks for the link

[deadshank 24652]

[Mullet Free 40]

 

swiss national bank had to double size of credit line to get deal done 

[Sawbonz 27541]

So everything is fine right guys?

[Homercles 10205]

5 minutes ago, Sawbonz said:

So everything is fine right guys?

The atm at Walgreens was out of order today, so I assume the great bank failures have started since FDIC hasn’t insured 100% of deposits yet.  Time to stock up on canned beans, sardines and milk duds, the revolution is at hand.  

[Neonmoon 38129]

Restore Glass-Steagall, and all the banks will stop crashing 

[FartingMonk 3606]

So any truth on the rumors that every banking bigwig and players from the Biden crew are in Omaha having a meeting with the Oracle?

[Schulz2.0 28951]

I've already started drinking snow coffee and eating birds.

[Not a cat 5652]

You'd think they could cash in some of that Nazi gold they're hoarding.

[Jackson P. Neighbors 136]

8 hours ago, Incredulity said:

It’s been reported that SVB would have passed a stress test.  

A few comments:

Of course they would have, and I guarantee they had ongoing capitalization stress tests done internally all the time. This is just how banks that size operate despite the uninformed comments here. There is zero that would have been done differently considering the D-F $250B threshold and the so-called rollbacks. For those that care, a stress test is a set of pre-defined economic scenarios that attempt to describe an adverse operating environment and the output is what an institution's capital adequacy, earnings performance, asset quality, liquidity, and market risk/sensitivity position would look like given such a scenario. There is no proscribed model to carry out a scenario, it is up to each institution to develop their own which is then scrutinized and blessed by the regulator. If you happen to be a stats nerd, think of the overall scenario as a 95% adverse VAR case. Basically a very extreme outlier economic situation. What SVB encountered was well beyond that and cannot be effectively modeled. Just like it is impossible to model fraud, it is equally impossible to model a bank run. "Human nature" is not a measurable value to be used as an independent variable in multivariate regression.

Regarding the post about the Fed having 'heightened attention' or somesuch on SVB, this is just to try and get out ahead of inevitable upcoming criticism of FRB regulation by congress. MRA (matters requiring attention) are not uncommon and are outlined in examination reports. These are issues to be addressed by bank management but they are not legal issues. This is a very important but poorly understood fact. If the Fed had ongoing, long-term serious regulatory issues with SVB, a publicly-available Enforcement Action/Formal Agreement/Cease and Desist order would have been issued in the normal channels. This is what such a document looks like: Order to Cease and Desist (federalreserve.gov) There may have been plenty of issues identified in a recent regulatory exam, but they did not rise to the level of a public notice. This is a fact.

This was simply a bank run driven by self-fulfilling hysteria. And frankly, that is much scarier than an actual failure due to capital or bad loans or fraud or insider conduct. The government and public cannot guard effectively against a run. It is gut wrenching to look at what is happening right now and to know there is no easy way out.

 

 

 

[wildcat09 29346]

14 minutes ago, Jackson P. Neighbors said:

A few comments:

Of course they would have, and I guarantee they had ongoing capitalization stress tests done internally all the time. This is just how banks that size operate despite the uninformed comments here. There is zero that would have been done differently considering the D-F $250B threshold and the so-called rollbacks. For those that care, a stress test is a set of pre-defined economic scenarios that attempt to describe an adverse operating environment and the output is what an institution's capital adequacy, earnings performance, asset quality, liquidity, and market risk/sensitivity position would look like given such a scenario. There is no proscribed model to carry out a scenario, it is up to each institution to develop their own which is then scrutinized and blessed by the regulator. If you happen to be a stats nerd, think of the overall scenario as a 95% adverse VAR case. Basically a very extreme outlier economic situation. What SVB encountered was well beyond that and cannot be effectively modeled. Just like it is impossible to model fraud, it is equally impossible to model a bank run. "Human nature" is not a measurable value to be used as an independent variable in multivariate regression.

Regarding the post about the Fed having 'heightened attention' or somesuch on SVB, this is just to try and get out ahead of inevitable upcoming criticism of FRB regulation by congress. MRA (matters requiring attention) are not uncommon and are outlined in examination reports. These are issues to be addressed by bank management but they are not legal issues. This is a very important but poorly understood fact. If the Fed had ongoing, long-term serious regulatory issues with SVB, a publicly-available Enforcement Action/Formal Agreement/Cease and Desist order would have been issued in the normal channels. This is what such a document looks like: Order to Cease and Desist (federalreserve.gov) There may have been plenty of issues identified in a recent regulatory exam, but they did not rise to the level of a public notice. This is a fact.

This was simply a bank run driven by self-fulfilling hysteria. And frankly, that is much scarier than an actual failure due to capital or bad loans or fraud or insider conduct. The government and public cannot guard effectively against a run. It is gut wrenching to look at what is happening right now and to know there is no easy way out.

 

 

 

Hence my proposal to load up all the wealthiest VC nerds on an ice floe and push them out to sea. They can’t be trusted not to gin up a hundred bank runs or even accidentally program an AI to kill us all in an hysterical overreaction to one of them getting divorced or something even dumber.

[wackawacka 177]

1 hour ago, Jackson P. Neighbors said:

A few comments:

Of course they would have, and I guarantee they had ongoing capitalization stress tests done internally all the time. This is just how banks that size operate despite the uninformed comments here. There is zero that would have been done differently considering the D-F $250B threshold and the so-called rollbacks. For those that care, a stress test is a set of pre-defined economic scenarios that attempt to describe an adverse operating environment and the output is what an institution's capital adequacy, earnings performance, asset quality, liquidity, and market risk/sensitivity position would look like given such a scenario. There is no proscribed model to carry out a scenario, it is up to each institution to develop their own which is then scrutinized and blessed by the regulator. If you happen to be a stats nerd, think of the overall scenario as a 95% adverse VAR case. Basically a very extreme outlier economic situation. What SVB encountered was well beyond that and cannot be effectively modeled. Just like it is impossible to model fraud, it is equally impossible to model a bank run. "Human nature" is not a measurable value to be used as an independent variable in multivariate regression.

Regarding the post about the Fed having 'heightened attention' or somesuch on SVB, this is just to try and get out ahead of inevitable upcoming criticism of FRB regulation by congress. MRA (matters requiring attention) are not uncommon and are outlined in examination reports. These are issues to be addressed by bank management but they are not legal issues. This is a very important but poorly understood fact. If the Fed had ongoing, long-term serious regulatory issues with SVB, a publicly-available Enforcement Action/Formal Agreement/Cease and Desist order would have been issued in the normal channels. This is what such a document looks like: Order to Cease and Desist (federalreserve.gov) There may have been plenty of issues identified in a recent regulatory exam, but they did not rise to the level of a public notice. This is a fact.

This was simply a bank run driven by self-fulfilling hysteria. And frankly, that is much scarier than an actual failure due to capital or bad loans or fraud or insider conduct. The government and public cannot guard effectively against a run. It is gut wrenching to look at what is happening right now and to know there is no easy way out.

 

 

 

This is categorically untrue. Globally systematically important banks have to mark their portfolio to market and have liquidity requirements that SVB and other regional banks who have assets under $250b do not. 

The liquidity requirements alone would have triggered a change in their portfolio approach. Additionally, it would not allowed them to be surprised by loses on long dated treasury as those loses were only realized when sold vs GSIBs have to make their portfolio to market.

Edited March 20, 2023 by wackawacka

[Mullet Free 40]

52 minutes ago, Jackson P. Neighbors said:

A few comments:

Of course they would have, and I guarantee they had ongoing capitalization stress tests done internally all the time. This is just how banks that size operate despite the uninformed comments here. There is zero that would have been done differently considering the D-F $250B threshold and the so-called rollbacks. For those that care, a stress test is a set of pre-defined economic scenarios that attempt to describe an adverse operating environment and the output is what an institution's capital adequacy, earnings performance, asset quality, liquidity, and market risk/sensitivity position would look like given such a scenario. There is no proscribed model to carry out a scenario, it is up to each institution to develop their own which is then scrutinized and blessed by the regulator. If you happen to be a stats nerd, think of the overall scenario as a 95% adverse VAR case. Basically a very extreme outlier economic situation. What SVB encountered was well beyond that and cannot be effectively modeled. Just like it is impossible to model fraud, it is equally impossible to model a bank run. "Human nature" is not a measurable value to be used as an independent variable in multivariate regression.

Regarding the post about the Fed having 'heightened attention' or somesuch on SVB, this is just to try and get out ahead of inevitable upcoming criticism of FRB regulation by congress. MRA (matters requiring attention) are not uncommon and are outlined in examination reports. These are issues to be addressed by bank management but they are not legal issues. This is a very important but poorly understood fact. If the Fed had ongoing, long-term serious regulatory issues with SVB, a publicly-available Enforcement Action/Formal Agreement/Cease and Desist order would have been issued in the normal channels. This is what such a document looks like: Order to Cease and Desist (federalreserve.gov) There may have been plenty of issues identified in a recent regulatory exam, but they did not rise to the level of a public notice. This is a fact.

This was simply a bank run driven by self-fulfilling hysteria. And frankly, that is much scarier than an actual failure due to capital or bad loans or fraud or insider conduct. The government and public cannot guard effectively against a run. It is gut wrenching to look at what is happening right now and to know there is no easy way out.

 

 

 

If the SVB failure was simply caused by psychology, how would you explain the rest of the failures seemingly following it in line? All the effect of shaken confidence?

[wackawacka 177]

3 minutes ago, Mullet Free said:

If the SVB failure was simply caused by psychology, how would you explain the rest of the failures seemingly following it in line? All the effect of shaken confidence?

Not a defense of SVB, but no regional bank could withstand $54b? in withdrawls so there is merit to the run of the bank argument. With that said, it does not mean the bank was mismanaged and potentially insolvent which is seen in no other bank wanting to buy their assets. Every bank even GS wanted to own SVB but not one of them is willing to acquire their (toxic) assets because as you look into their loan portfolio then you quickly discover how quickly the bank is under water as it was essentially run as a leveraged PE fund.

[unoriginal 55]

6 hours ago, Mullet Free said:

 

swiss national bank had to double size of credit line to get deal done 

Here's 100B if you'll buy this bank for 2B. Things must be bad at CS.

[Beau Vine 54207]

 

[Hefeweizen 5310]

12 minutes ago, Beau Vine said:

 

That’s a hell of a company killer resume.