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Comment by mistrial9 | Hacker News Reader

the response of the oversight committee was to place blame on local management and call to increase oversight.

What about the endless oversight so famously wrapped around every bank right now? Is it true that you cannot in reality start a Bank in the USA without an Oracle license? due to the vast and arcane reporting requirements already in place for decades?

Does this lead to a situation where the innovators are actually using micro-flaws in supervision rules and magnifying that by thousands of times compared to a "well-run" Bank, directly contradicting the aims of oversight and specifically due to excessive and byzantine existing oversight?

Does this Federal Reserve have the ability to make rules that work for Banks in 2023 after the extended-lifetime cash QE ?

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> response of the oversight committee was to place blame on local management

The Fed's review found "four key takeaways on the causes of the bank's failure." The first fingers management. Nos. 2 to 4 criticise supervisors.

> What about the endless oversight so famously wrapped around every bank right now

SVB was not subject to liquidity coverage ratios (LCRs), a regulatory rollback pushed through in 2017 [1]. Had SVB been, they would have breached their LCR in March of 2022.

> Is it true that you cannot in reality start a Bank in the USA without an Oracle license?

No. Kentland Federal Savings and Loan doesn't use computers [2].

> Does this Federal Reserve have the ability to make rules that work for Banks in 2023 after the extended-lifetime cash QE

Yes, the same book other banks follow. (Our pretending HTM securities always preserve value and are liquid assets is an ongoing farce that is being fixed.)

[1] https://apnews.com/article/banking-crisis-congress-lobbying-...

[2] https://www.indiatimes.com/worth/news/america-smallest-bank-...

There is a remarkable paragraph in the report:

"On March 9, SVB lost over $40 billion in deposits, and SVBFG management expected to lose over $100 billion more on March 10. This deposit outflow was remarkable in terms of scale and scope and represented roughly 85 percent of the bank’s deposit base. By comparison, estimates suggest that the failure of Wachovia in 2008 included about $10 billion in outflows over 8 days, while the failure of Washington Mutual in 2008 included $19 billion over 16 days. In response to these actual and expected deposit outflows, SVB failed on March 10, 2023, which in turn led to the later bankruptcy of SVBFG."

> On March 9, SVB lost over $40 billion in deposits, and SVBFG management expected to lose over $100 billion more on March 10.

March 9th and 10th were the Thursday and Friday before SVB collapsed.

On March 8th, Goldman Sachs advised SVB to go public with non-binding stock commitments [1][2]. The stock dropped, the commitments vanished, and then it plummeted. Because SVB was pretending its 70¢ bonds were worth $1, it had clearly lost the faith of big investors, and it couldn't go to the Fed; it was illiquid and insolvent.

[1] https://www.ft.com/content/7e7fdddb-724c-42fd-98ee-5d7248d53...

[2] https://ir.svb.com/news-and-research/news/news-details/2023/...

It would be nice if we could "put our money where our mouth is" by opting out of the traditional banking system. Unfortunately, the same regulators responsible for the banking system seem increasingly intent on eliminating the freedom to engage with any potential alternatives to it.

You can. If you're in the US, sign up for a brokerage and park your uninvested cash in a government securities (primarily US treasuries) invested money market fund [1]. You're now backed by the Federal Reserve instead of FDIC and their oversight of fractional reserve banking [2] This is a nice hack around the fact that the Fed won't approve a Narrow Bank [3].

[1] https://www.investor.gov/introduction-investing/investing-ba...

[2] https://archive.is/HXfvw (Bloomberg: Matt Levine: Banking Gets a Bit Narrower)

[3] https://www.chicagobooth.edu/review/safest-bank-fed-wont-san...

(not investing advice)

I'm talking about cryptocurrency.

> I'm talking about cryptocurrency

What restricts people from putting their money in crypto?

It's being increasingly regulated and exchanges are being shut down.

And it is peer-to-peer, so buy it from a friend.

Good luck opening that can of worms on Hackernews

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