7 ms·
That needs to go back to the 80s to capture the SnL crisis. It dwarfs 08 in bank failures. It better indicates the conglomeration of the many banks into the few
by thehumanmeat 3y ago
That needs to go back to the 80s to capture the SnL crisis. It dwarfs 08 in bank failures. It better indicates the conglomeration of the many banks into the few we have today.
- FormerBandmate 3y ago08 was artificially low because many banks got merged at a fire sale. Wachovia, Merrill Lynch, Bear Stearns, and National City stick out. Other financial institutions got essentially nationalized and stock became mostly worthless like Citi and AIG, although the government sold most of their stock in 2011 Credit Suisse is about the same size as SVB, Signature Bank, and First Republic combined but it got “acquired” by UBS at a price 60% below its last trading price in a deal where $17 billion of debt was wiped out so it doesn’t count here
- btilly 3y agoCredit Suisse is not included because it is a Swiss bank, not an FDIC insured US bank. Lehman Brothers is also not included because, even though it was a US bank, it was an investment bank with no FDIC insured deposits. It was around the size of all of this year's failures, combined. As you note, bank bailouts that were not FDIC bankruptcies are also not included.
- jeremyjh 3y agoI think GP knows this, but I also think you know that the graph is trying to paint a particular picture, and that picture is misleading because a lot of information is missing. We are not in the midst of a financial crisis that approaches 2008, and the graph is trying to make us think something different.
- btilly 3y agoI know nothing of the sort. I think someone found an interesting dataset, tried to visualize it, and thought it looked interesting. I doubt that there was any motive to the dataset other than, "Here's what I get from the FDIC, what does it look like?" Then shared code and source so that anyone else could reproduce it. If you can find another data source that gives a fuller picture, you should. But compiling these data sources takes work. And the ones you get are all going to be a particular slice that represents some things but not others. I did not personally find it misleading.
- lazide 3y agoNot in an ‘08 sized crisis - yet. Wait until commercial property debt finally ‘looks down’. It’s been running off the cliff for a long time already, and is in exactly the same boat as the securities that took out SVB, etc.
- igravious 3y agoAnd Bear Sterns?
- FormerBandmate 3y agoI know all of that, but they are still important caveats. We are not in a worse place than 08 (yet)
- rrrrrrrrrrrryan 3y agoIt depends on what we're trying to visualize. From an investor's perspective, a bank whose assets get sold for pennies on the dollar in a fire sale is essentially a failure. Lehmann Brothers was also a massive (investment) bank failure with huge second order effects on the economy. This graphic seems to be modeling things from a taxpayer perspective. These banks failed and the government needed to step in to do something to ensure people could get their deposits.
- jeremyjh 3y agoFDIC premiums are not payed by taxpayers. What we're visualizing here are bank failures assumed by FDIC. The too big to fail banks didn't technically fail, but to give an accurate picture of a financial crisis they should be on the graph.
- haldujai 3y agoAgree, this representation also makes WaMu’s failure look like the worst in recent history but it felt like one of the smaller problems at the time with what was going on with the investment banks, Fannie/Freddie and AIG.
- _heimdall 3y ago> FDIC premiums are not payed by taxpayers Tax payers are legally required to pay taxes in USD. I'm not actually sure if the IRS technically accepts cash but if so it would be extremely rare. Meaning all tax payers have a bank account and ultimately foot the bill even though it is technically funneled through the banks' books first.
- majormajor 3y ago"Footing the bill by having a bank account" is one of those very-hard-to-picture-or-feel things in days when most bank accounts are "free" and these banks have so many lines of business. E.g. am I paying for FRBs bailout by increased loan application fees if I buy a house or car or such? That's what I'd imagine, or maybe it's just that maybe otherwise savings accounts would pay a bit more interest or something?
- themagician 3y agoI have faith that we can top S&L. We have the technology. We have the talent. There are six banks with over a trillion in assets in the US. I have faith that one of them has been doing some wild book cooking. I'd place a bet on Citibank, followed by Wells Fargo. There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on… shame on you. Fool me… you can't get fooled again. I'm just hoping this time it's something absolutely outrageous just for the lulz of it all. Like, let's get some FTX-style absurdity. All the absurdity happens in crypto right now but I still have faith in regular banking. Some people still like the challenge of regulated markets.
- edrxty 3y agoThis may be my favorite all time HN comment. I totally buy it too.
- yieldcrv 3y agoIf you like absurdity, FTX has recovered 7.3 billion out of the 8.6 billion hole and plans on relaunching the exchange to make the last billions back in fees Most noteworthy is that this quick 8 month turnaround is partially thanks to the blockchain, and under no new laws being passed
- senectus1 3y agowth? you got a good link for this? I stopped paying attention a while ago
- readthenotes1 3y ago[dead]
- yieldcrv 3y agoreuters good enough? https://www.reuters.com/technology/bankrupt-crypto-exchange-ftx-has-recovered-73-bln-assets-attorney-2023-04-12/ https://www.reuters.com/technology/bankrupt-crypto-exchange-...
- derbOac 3y agoYeah these sorts of figures always frustrate me because the historical context for these things is so much broader, and it seems obvious to me to go back to the 80s, if not earlier. There's a better figure here I think: https://www.pewresearch.org/short-reads/2023/04/11/most-u-s-bank-failures-have-come-in-a-few-big-waves/ https://www.pewresearch.org/short-reads/2023/04/11/most-u-s-... Also some nice figures here: https://www.bankingstrategist.com/history-of-us-bank-failures https://www.bankingstrategist.com/history-of-us-bank-failure...
- DonsDiscountGas 3y agoGoing by Wikipedia, in 2021 dollars I count: 1980s S&L crisis: $654 Billion (summed 1984-1992 failures) across 23 banks 2008 crisis: $733 Billion (summed 2008-2011 failures) across 61 banks 2023 so far (it's only May): $556 Billion (Signature + SVB + FRC) across 3 banks. It looks like 2008-2011 is the "winner", although other commenters have mentioned forced mergers etc. may not be counted. https://en.wikipedia.org/wiki/List_of_largest_bank_failures_in_the_United_States https://en.wikipedia.org/wiki/List_of_largest_bank_failures_...
- boringg 3y agoThat on 2022 dollars?
- dnissley 3y agoAren't there some relevant details missing from this kind of analysis? Banks failing just means that the value of the banks assets fall below the value of their deposits, right? In which case the degree to which that happens seems to be highly relevant to this kind of comparison. E.g. the value of assets falling to 50% of deposits in bank failures in financial crisis A vs 90% in financial crisis B
- pjc50 3y agoIn most of these cases the fall is to 99% of the value, because that's the point at which they have to cease trading.
- haldujai 3y agoAt the very least that’s missing Fannie, Freddie, Bear, Merrill, Lehman, TARP and arguably AIG for another 1.2T+, granted a lot of this was eventually repaid as the FDIC will be as well.
- DonsDiscountGas 3y agoNone of those are consumer banks. Every dataset has to make scope decisions.
- rr808 3y ago> conglomeration of the many banks into the few we have today There are still thousands of banks in the USA. I dont really see why there should be more than 100. Canada has 5 big ones and a few dozen tiny ones. Same in UK and Australia.
- peter303 3y agoDeposit banks were banned from crossing state lines and investing in equities markets after the Great Depression. These limitations were removed in the 1990s.
- dalyons 3y agoIt’s not all roses - in Australia and Canada the few major banks operate in pseudo-cartel fashion. There’s few enough that they can effectively collude without doing it illegally.
- peter303 3y agoRound 2 of the 2023 bank crises might be commercial real estate loans like the 1980s crises. Some downtowns are still 40% vacant. This more a consequence of covid than bad bank behavior.
- fragsworth 3y agoYou are correct. Additionally, the size of the bank(s) are not really what matters. I want to see the scale (sum) of what was actually lost when they went bankrupt, and how much we (the public) have to put up to keep the system from collapsing. Does anyone have an actual visualization of how much we ponied up to keep our banking system from collapsing? Did the public just provide a reasonable interest rate loan for a few months to a year? Or was it a sweet 0% loan for...ever? The important details are lost in the media reports and it would be nice to get a sense for what really happened.
- than3 3y agoGenerally speaking, it turns into free assets. The people involved usually don't acquire the assets/associated debt without some kind of guarantee. OneWest Bank for example after 2008 had a guarantee where if the assets defaulted above a certain amount they would receive full value of the loans in a payout from the government. They were actively foreclosing on people to justify catastrophic losses to get the bailout. Not sure how that ended up since I was only marginally aware of the start of that and everything went silent once the news got wind of the perverse incentives. In terms of trends, the bailout game has been played consistently since the the dollar went off the gold standard (1971 iirc). The ponzi is starting to unwind now that inflationary pressures are out of control. I expect concentration to eventually lead to nationalization followed by a new currency which will fail because they lost all credibility from their mismanagement as a private entity. That's what's happened historically with every country that debases its store of value above the point macro effects become noticable which are around 3:1 ratio).
- TheSpiceIsLife 3y agoThere's argument to be made that approximately any cost to keep the system from collapsing is a trade-off worth making if the alternative is the system collapsing.
- jeremyjh 3y agoThere were winners and losers, but the government made money on TARP. That doesn't fit anyone's narrative very well, so you don't hear that much about it, but its a fact. So far not a public dollar has been lost in the current crisis. FDIC, like other insurance, is paid for by the insured. Every FDIC bank in the country is paying the cost of this. https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program
- pranshum 3y agoI wrote a post about this. The frequency of failures was much higher but the individual failures were smaller: https://yarn.pranshum.com/banks2 https://yarn.pranshum.com/banks2
- a3w 3y agosaturday night life crisis?
- cyclecount 3y agoSavings and loan crisis https://en.wikipedia.org/wiki/Savings_and_loan_crisis https://en.wikipedia.org/wiki/Savings_and_loan_crisis