Love you Johnny, but this particular rabid dog doesn’t respect social mores. He goes on rants, time and time again.
None of them make sense, and it dirties all of us.
He doesn’t care. He’s a parasite. Mods don’t care, because he occasional glances one of their talking points.
The Fed or the FDIC does not pick your board. They will do a background check to make sure that person doesn’t have a criminal background or was a senior officer or director of a bank that failed. But other than that, the regulators have very little say in who is on your board. They have a little more influence on who is the senior management of the bank but not much more. Most bank boards are somewhat diverse. That is just smart business practices.
Wokeism didn’t fail SVB. Bad banking practices did. All Bank’s and probably all companies nod towards diversity and ESG. It looks good and it doesn’t cost them anything to do it. Whether they believe it and actually practice it…that is another story.
Bank’s should be diverse, not because of some social crusade, it is because it is good business. Everyone has seen my statistics on AA small businesses so I won’t bore anyone again. But the basic premise is they fail at the same rate as white small businesses but there are FAR fewer AA small businesses. So it is like money ball or major league baseball in the 1940s or 1950s. There is a huge wealth of business talent that going underutilized and thus banks are under lending to. I don’t care about the crusade, I care about deploying capital and getting a higher than normal risk adjusted rate of return. The best money ball situation in finance is AA small businesses.
Thank you for the insight.
How is this in anyway comparable to 2008?
In 2008, the banks were directly selling crap mortgage bonds to investors and then short selling those bonds right after selling them via swaps. The banks that didn’t do this were still paying mortgage lenders to sell mortgages to people who couldn’t afford them via sub primes.
How is that comparable to this? SVB simply had longed on bonds and expected interest rates to remain low for the term of said bonds. They didn’t. They went up resulting in an inability to pay off those bonds because of people pulling out their deposits. Wrong? Yes. Similar to 08? No way.
A few of us take emotional swan dives at every inkling those pesky socialistic commies are up to some good.
Please tell me that’s parody.
The taxes and penalties on that just sounds like such a winning strategy.
I cant tell anymore…
But with all their money they might have enough for a dinner without dessert at Applebees.
Taxes and penalties…lol…to.own the libs and support Trump.
It’s also pretty funny that he thinks those are cash deposits.
That should give some insight into how much his 401K is worth.
Right, I’m relativity confident that a not small percentage of the Trump base’s two part retirement plan starts with “Mega” and “Power”
With a sprinkling of “Scratchers”.
If they cut interest rates and made money cheap again would that stabilize banks?
…
BREAKING: Banking giant UBS is buying its troubled rival Credit Suisse in an effort to avoid further market-shaking turmoil, Swiss President Alain Berset announced.
No, higher interest rates are generally good for banks. The spread between what banks charge on loans and what their cost of funds are higher when rates are higher.
The problem is the fed kept interest rates artificially low for so long and now they are artificially high. Banks need market equilibrium but they are getting artificial interest rates from the Fed.
What would market equilibrium look like?
Thoughts on UBS buying Credit Suisse?
More consolidation coming to avoid a “contagion”?
I honestly don’t know what interest rate equilibrium is, nor do most bankers. It has been artificially manipulated by the Fed for so long that no one really knows.
I think consolidation is going to happen. The banks that bet long to get some yield when rates were artificially low, will be gobbled up.
Nice article on historical runs on banks.
So what happens with those long term bonds that the now weakened banks own during
a buy out ? Does the new bigger bank, just by shear size , able to add these lower value
assets to their bond portfolio, but not significantly impact their bond portfolio liquidity ?
Or do they cash out the low yield bonds and just reinvest in new bond instruments that have
have a 2-3x better yield? I guess I’m asking what price does the new bank actually pay for
a troubled bank that has billions in low yield bonds ? They pay depositors value or current asset
value ?
Per article posted by coachv, that may be about 187 banks that are vulnerable if half of their
depositors did full withdrawals. There is certainly some human behavior psychology at work
here that has to be managed to avert a panic.
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