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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][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]

Thiel likely orchestrated this, and the subsequent bailout of the wealthy depositors, so it can be a campaign issue used by the MAGA crowd against Biden. “Biden helped out his wealthy California buddies” — ignoring the reality that many of them are loony libertarians. [/quote]

I know that's your party line: Thiel did X.

Don't you think if one person can take it down, that's a problem?

This in the face of zillions of pages of regulations in place right now. It's not like these aren't already in place.

What have all these agencies been doing up until now? They're certainly drawing a pay check.[/quote]

Well what is your proposal for how a cree society can stop a private person from causing a bank run by spreading rumors around his wealthy friends? What could be done other than prosecuting him after the fact? Shouldn’t we prosecute this behavior?[/quote]

SVB is not a good poster child for this for this thesis.

SVB announced a loss on sales of securities and said they were were going to raise capital to fill it, without having firm commitments in hand for that capital.  This causes people to really look at the financials, and they did not tell a good story.  This is what set off the rumors.  In other words, this was a case where indeed smoke indicated a fire.

As a former bank regulator I get why there may have been no really firm regulatory action earlier.  People on the ground see red flags for months, raise them several times with management, but management demurs because for whatever reason, they don't want to bother using resources for something they think will work itself out.  The people on the ground bow out, satisfied they have done their duty in raising the issues, because they don't want to get a reputation as troublemakers.

What I don't get is why all the equity analysts were not all over this bank given its financials.  This is perhaps the most mysterious miss.[/quote]

This has me rolling my eyes! Forget about ‘equity analysts’ (always a sad profession, recently a dying one!), talk about the failures of government, politicians, the media, the legal profession, academia, civil society, etc in regards not just to banking regulation narrowly (which sucks), but all the related issues around economics and finance that have created these crises and a whole host of other problems. Basically all those worlds play stupid games around denying culpability for their failures, these episodes should lead to lord of questions about all those small worlds.[/quote]

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