Reply to SVB Bank Run: Fed Calling Emergency Meeting

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]We should have done with Iceland did in '08.  Let the banks fail, bail out the consumers, and prosecute the bankers.[/quote]

This is a lot easier in a country with less than 400,000 people.  [/quote]

+1 Also, most of the country is uninhabited, and it has restrictive immigration policies.[/quote]

And has a robust fishing industry [/quote]

Plus cheap thermal energy.[/quote]

The Icelandic crisis was due to “hot money” deposit flows, similar to SVB. UK citizens were putting their deposits in Icelandic banks, which paid significantly higher rates of interest than banks in the UK. When the financial crisis happened, UK and other foreign depositors quickly withdrew their money from Icelandic banks and those banks had to try to try to sell long dated mortgage backed securities that were suddenly worth a lot less than their par value.

It’s a similar situation as SVB - it was a liquidity issue that led to bank run. [/quote]

The proximate cause of almost every bank failure is lack of liquidity.  (Barings come to mind as a large exception.) The story of why liquidity dried up at particular failed banks varies.[/quote]

SVB suffered from a uniquely narrow set of depositors, their fickle behavior is the proximate liquidity issues.[/quote]

Fickle behavior, egged on by Peter Thiel and a few others.  Why isn't he being held accountable for the banks' losses?  Why does everyone keep making lame excuses for billionaires and big banks?[/quote]

Because unfortunately they had every right to do what they did.  Assuming that is that they weren't also shorting the stock.  Can't legislate morality.  SVB also knew what type of person he is so it still comes back to poor risk management.[/quote]

In the not too distant past bank regulators would have been very clear that hyper-concentrated deposits would pose a great risk. Unfortunately, banking regulation hasn’t done enough to get smarter since the financial crisis of 2008 to ???. It’s really not about legislating morality, it’s about old fashioned prudence in preventing disaster.[/quote]

Would they?  I can't think of a regulation that would have applied.  App makers, influencers and crypto enthusiasts aren't a standardized demographic.[/quote]

Exactly.  There are a lot of people posting here who know nothing about bank regulation.[/quote]

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