General > General Technical Chat
Silicon Valley Bank Collapses
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TimFox:
1.  The statement "not a single day goes by" is far too absolute.  Most single days go by without a US bank failure.
2.  For the usual accounts, < $250k by today's regulation, nothing has ever been lost to the depositor and the delays are minimal.
3.  The amount of reserves kept by banks (< 100%) is a matter of regulation, and the politics involves listening either to banks (to reduce the requirement) or bank critics (to increase the requirement).  The results oscillate with a period determined by how long it takes to forget the previous problem.
4.  When the authorities do intervene on a failed bank, the shareholders and executives take the loss.

m k:

--- Quote from: Gyro on March 15, 2023, 08:15:10 pm ---I didn't know about Deutsche Bank. I thought the EU, like the UK, had put strict liquidity rules and 'financial challenge tests' in place [Edit: following 2008]. Credit Suisse on the other hand have had a somewhat chequered history, scandal wise, lost money for the past two years and aren't predicting profitability until 2024 (that's probably a maybe now). Saudi Bank have said that they won't inject any more money.

--- End quote ---

I remember that Deutsche Bank and Societe Generale were pretty deep in Greece and Italy.
Maybe there are still something left from there.
Gyro:
Ah yes, now that I read the DB wikipedia page, quite a lot of news stories come back to mind. Their exposure in Greece seems minimal now, but still Spain and Italy.
coppice:

--- Quote from: Gyro on March 15, 2023, 08:15:10 pm ---I didn't know about Deutsche Bank. I thought the EU, like the UK, had put strict liquidity rules and 'financial challenge tests' in place [Edit: following 2008]. Credit Suisse on the other hand have had a somewhat chequered history, scandal wise, lost money for the past two years and aren't predicting profitability until 2024 (that's probably a maybe now). Saudi Bank have said that they won't inject any more money.

--- End quote ---
From a quick look it seems Deutsche Bank's position may have improved. The rating agencies considered them dodgy for a long time, but seem to have upgraded them a few months ago. Then again, the rating agencies are worth about as much as a campaign promise.
james_s:

--- Quote from: Stray Electron on March 15, 2023, 08:31:48 pm ---   I don't see what's irrational about that fear.  Everyone is afraid that with everyone else taking money from the bank that if they delay getting their money that it will all be gone and they'll lose their savings.  Yes, I know FDIC insures most individual accounts to $250,000 but many people (1) don't trust the government, (2) are afraid it will take months or years to be repaid (3) don't trust the government, (4) afraid that the US Gov or the FDIC will go broke and not everyone will be paid or (6) don't trust the government.  In the US, we've all grown up with stories of the bank crash of 1929 and 1930 and how many people lost EVERYTHING so it drives our thinking.   OTOH if the banks actually kept a significant portion of their deposits in the bank and on hand instead of playing financial Russian Roulette with it then people would be a little more inclined to trust the US banking system.  But realistically, not a single day goes by that you don't hear of another bank, credit union, investment fund, Saving and Loan or other US financial institution that was been caught with their hand in somebody else's cookie jar.

   Until the banks and other institutions and their directors, managers, etc etc etc are all held truely accountable, no one is going to trust the current system.

--- End quote ---


But if they didn't all take the money out, everything would be fine and the bank wouldn't fail. It is their fear-driven actions that directly cause it to fail.

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