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Old 03-20-2023, 06:39 AM
 
Location: Wherabouts Unknown!
7,841 posts, read 18,955,760 times
Reputation: 9584

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Quote:
Originally Posted by 16 Acres View Post
How long will banks keep bailing out other banks?
Quote:
Originally Posted by ChessieMom View Post
You'd have to ask them.
Asking the closest wall would probably provide a better answer!
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Old 03-20-2023, 08:06 AM
 
18,495 posts, read 15,482,355 times
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Quote:
Originally Posted by moguldreamer View Post
I find it interesting that Sheila Bair - the highly respected former Chairwoman of the FDIC - disagrees with that view.






There is another approach.

The US banking system is highly splintered. There are about 4,500 commercial banks and savings institutions operating in the United States, according to the Federal Reserve. This number includes both large national banks and smaller community banks. In addition to commercial banks, there are also about 1,100 credit unions operating in the United States.

Contrast that with Canada, which has about 35 banks.

The alternative to our current system - with thousands of too-small-to-protect-themselves banks - is a much smaller number of mega banks, each of which would have sufficient assets and sufficient constant regulatory review that the US economy would no longer be at risk.

The downside to that is many rural jurisdictions - with Congressmen who vote - would oppose that. They like their little po-dunk banks that understand local issues.



The bold above is a standard Democratic talking point. It also is false. There was a Bi-Partisan bill reducing the compliance burden on mid-sized banks. Everyone thought that made sense, as the issues facing big money center banks are very different from issues facing a small bank in Iowa that deals with tractors and feed lots.
Since when, exactly, is it politically possible to impose and maintain a profit-limiting regulation on an extremely large corporation in the US?
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Old 03-20-2023, 08:28 AM
 
7,395 posts, read 3,592,038 times
Reputation: 14080
Quote:
Originally Posted by YorktownGal View Post
Thanks to Barney Frank, there were no bank regulators.
That's a gross mischaracterization. There are regulators and examiners at the Federal Reserve Bank of San Francisco who get up every day to examine the books of small and mid-sized banks such as SVB.

Very large banks have extra regulators and examiners.

SVB's regulators were shirking their job responsibilities.
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Old 03-20-2023, 08:42 AM
 
7,395 posts, read 3,592,038 times
Reputation: 14080
Quote:
Originally Posted by amil23 View Post
This bank hijinks
What, exactly, are these "hijinks" you speak of?

Quote:
Originally Posted by amil23 View Post
was just a more palatable way for the Fed to bail out the donors in Cali and NY.
There is always a political component. There is no question that Silicon Valley is a major net contributor to the Democratic Party and its candidates, and of course California has 55 Electoral Votes.

Would this administration have done the same thing for a bank located in Texas that primarily loans to Oil & Gas companies? Or for a mid-sized bank in Utah that primarily loans to small & medium-sized businesses?
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Old 03-20-2023, 08:46 AM
 
8,005 posts, read 7,155,458 times
Reputation: 18165
Quote:
Originally Posted by moguldreamer View Post
What, exactly, are these "hijinks" you speak of?

There is always a political component. There is no question that Silicon Valley is a major net contributor to the Democratic Party and its candidates, and of course California has 55 Electoral Votes.

Would this administration have done the same thing for a bank located in Texas that primarily loans to Oil & Gas companies? Or for a mid-sized bank in Utah that primarily loans to small & medium-sized businesses?
Wondering who the specific beneficiaries of the 2018 Dodd-Frank threshold change were and what the political component of that move was.
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Old 03-20-2023, 08:49 AM
 
6,568 posts, read 4,211,819 times
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Quote:
Originally Posted by moguldreamer View Post
What, exactly, are these "hijinks" you speak of?



There is always a political component. There is no question that Silicon Valley is a major net contributor to the Democratic Party and its candidates, and of course California has 55 Electoral Votes.

Would this administration have done the same thing for a bank located in Texas that primarily loans to Oil & Gas companies? Or for a mid-sized bank in Utah that primarily loans to small & medium-sized businesses?
I’ve been thinking about your last 2 questions, and unfortunately, I think the answer might be no. If this had happened at a smaller regional bank in the Deep South, I’m afraid depositor’s funds might have only been protected up to the FDIC guarantee of $250k. The rebuttal, of course, is going to be that the fallout wouldn’t have been as bad; however the fallout for individual clients who had deposits exceeding $250k would have been devastating. There needs to be some consistency in how things are handled, regardless of who’s in office.
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Old 03-20-2023, 08:51 AM
 
7,395 posts, read 3,592,038 times
Reputation: 14080
Quote:
Originally Posted by ncole1 View Post
Since when, exactly, is it politically possible to impose and maintain a profit-limiting regulation on an extremely large corporation in the US?
Why in the world would we want to???

Around the globe, national governments want to help their large corporations compete and thrive.

Except in the USA, where the dominant political party views "business" and especially "large business" as "original sin."

Despite the shrill hysterical rantings of Elizabeth Warren & Occasional-Cortex, corporation is not a 4-letter word.
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Old 03-20-2023, 09:08 AM
 
2,519 posts, read 1,113,761 times
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I didn't read all the posts yet but I can tell you now I am taking all my money out of my savings accounts. I'm not taking any chances that this will happen to my bank. Plus the interest I made went right back to the IRS why bother saving for emergencies in the bank when I end up having to give it back to them.
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Old 03-20-2023, 11:53 AM
 
Location: Raleigh
13,654 posts, read 12,314,175 times
Reputation: 20099
Quote:
Originally Posted by Lizap View Post
There may well be a furthur banking crisis anyway. Many have lost faith in banks and might pull money and place it elsewhere (e.g., mm funds at brokerages). How do you justify guaranteeing that bank clients with more than $250k will be made whole? They knew full well their $ was only protected up to this amount, but decided to put it there anyway. I read that executives sold stock shortly before all this happened and one CEO fled to his $3 mil. home in Hawaii. Is the government going to step in when every business fails? This insanity must stop.
"They" ultimately didn't really have a choice. At SVB many clients were contractually required to keep their funds in the bank.
As to the $250K minimum...If you're going to be a business of any size much beyond a sole-proprietor one man powerwashing/painting company you have to trust your bank. It is what it is.

Quote:
Originally Posted by Lizap View Post
Excellent analysis by Kevin O’Leary

https://news.yahoo.com/shark-tank-st...ycsrp_catchall
It's like reading an analysis of a Nascar team strategy by Michael Jordan. Not really relevant.

Quote:
Originally Posted by Lizap View Post
Assets of the bank would be liquidated and depositors would receive some of their funds back. That’s the way business works. If you make poor decisions or mismanage, you may ultimately go out of business.
...Except banks are the infrastructure that allows business and commerce to work efficiently. Do you want this to be like Argentina where you have to carry a briefcase full of greenbacks to close on a house because the system is shaky and the funds can't be safely kept in escrow?
Quote:
Originally Posted by Lizap View Post
This is getting even more absurd. The next step is to nationalize the banking system.

https://www.cnbc.com/2023/03/18/mids...two-years.html
There is nothing absurd about a lobbying group making a request of the federal government.

Quote:
Originally Posted by Lizap View Post
I’ve been thinking about your last 2 questions, and unfortunately, I think the answer might be no. If this had happened at a smaller regional bank in the Deep South, I’m afraid depositor’s funds might have only been protected up to the FDIC guarantee of $250k. The rebuttal, of course, is going to be that the fallout wouldn’t have been as bad; however the fallout for individual clients who had deposits exceeding $250k would have been devastating. There needs to be some consistency in how things are handled, regardless of who’s in office.
I think it would ultimately depend on the commercial importance of the bank as well. If the banks failure is going to disrupt the national economy because clients will suddenly be unable to pay employees, vendors and suppliers then the government might step in. And don't ignore the relative political clout of any given bank. The chairs of the relevant subcommittees in the house and senate at any given time are as likely to be Republican as they are Democrat and Southern as they are Northern.
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Old 03-20-2023, 02:48 PM
 
7,209 posts, read 4,012,430 times
Reputation: 16429
Quote:
Originally Posted by Maddie104 View Post
Here's "The rest of the story":

Why did First Republic have a target on its back?
Investors saw similarities between First Republic and the failed Silicon Valley Bank — another midsize Bay Area-based lender with a deep-pocketed client base.

“These depositors are particularly trigger-prone,” said Patricia McCoy, a law professor at Boston College. “They’re sophisticated, they know they have other options, and they have mechanisms in place to move money quickly.”

That “particularly volatile” base of depositors presents a risk for investors, said McCoy, who helped establish the Consumer Financial Protection Bureau.

Big banks like JPMorgan Chase have diversified their depositor bases to include more of what McCoy calls “sticky deposits.” In other words, regular folks who have less than the FDIC-insured limit of $250,000 in the bank.

About two-thirds of First Republic’s deposits were uninsured. That’s far less than the 94% uninsured that Silicon Valley Bank had, but First Republic also had an unusually large 111% loan-to-deposit ratio at the end of last year, according to S&P Global — meaning it has loaned out more money than it has in deposits.

https://www.cnn.com/2023/03/17/busin...cue/index.html
Well, First Republic Bank is respected brand. I heard that Jimmy Diamond is working out a deal for them. Rather than incorporate First Republic into JPMorgan holdings, JPMorgan will increase First Republic's liquidity. Diamond wants to retain the First Republic Bank name. I hope it all works out.

BTW - First Republic Bank has HFT (high frequency traders).

Quote:
Originally Posted by moguldreamer View Post
There is another approach.

The US banking system is highly splintered. There are about 4,500 commercial banks and savings institutions operating in the United States, according to the Federal Reserve. This number includes both large national banks and smaller community banks. In addition to commercial banks, there are also about 1,100 credit unions operating in the United States.

Contrast that with Canada, which has about 35 banks.
The 2021 Canadian census enumerated a total population of 36,991,981. The 2021 USA census enumerated a total population of 331.9 million. Nine times the population of Canada.

Canada is the second largest country worldwide. Canada's population is in four largest provinces by area (Ontario, Quebec, British Columbia, and Alberta) together they account for 86.5% of the country's population. US is the third largest country worldwide. The US's larger population, unlike Canada's, is spread out across the entire country.

What works in a small population clustered in a smaller areas isn't going to work in a nine times larger population across an entire country.

Quote:
Originally Posted by moguldreamer View Post
There was a Bi-Partisan bill reducing the compliance burden on mid-sized banks. Everyone thought that made sense, as the issues facing big money center banks are very different from issues facing a small bank in Iowa that deals with tractors and feed lots.
It doesn't matter who thought it made sense - SVB, Signature Bank, First Republic, Credit Swiss - weren't in Iowa making deals on tractors and feed lots. The regional banks should have never been included.

Quote:
Originally Posted by moguldreamer View Post
That's a gross mischaracterization. There are regulators and examiners at the Federal Reserve Bank of San Francisco who get up every day to examine the books of small and mid-sized banks such as SVB.

Very large banks have extra regulators and examiners.

SVB's regulators were shirking their job responsibilities.
A close relative is an examiner at the NYSE. Examiners rotate companies to prevents friendships and prevent bribes. So there isn't one examiner assigned to a company. Some examiners are better than other. Regardless, the NYSE examiner checks the members books once a year or less. Can't imagine the Fed is all that different.

The rise in interest rates has changed the finances of all banks. Perhaps the Federal Reserve Examiners viewed SVB before Spring 2022, a little less than a year ago & everything seemed fine. The interest rate increases were the wild card. An examiner wouldn't have been able to anticipate this turn in the economy.

Many people are hoping that the Fed stops interest rate hikes until the bank crisis settles down.

However, the Fed Reserve/NYSE needed to start to monitor the selling of stock by bank officials more closely. It seems that is a sign of a pending bank failure and should be illegal.

Last edited by YorktownGal; 03-20-2023 at 03:02 PM..
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