Outside BofA, their balance sheets are healthy. There isn’t serious speculation of contagion out of the regional banks. We put in place regulations to prevent this after 2008. Numpties rolled it back for “community banks” in 2017 [1], and that’s why we have this problem.
[1] https://apnews.com/article/banking-crisis-congress-lobbying-...
Woah, let's not over-exaggerate in times like these. Bank of America has about $110bn of unrealized losses on HTM securities, but that is against $200bn of Tier-1 capital. Comp that to SVB who had $16bn of unrealized losses against about that much Tier-1 capital.
BoA has a worse balance sheet that peers, but not an unhealthy one.
ppl withdraw deposits
80% of them go to JPMC
JPMC buys BofA
Different regulatory regimes. But it helped make their takeover possible.
In Credit Suisse’s case, specifically, it is difficult to see an alternate endgame. The regulations worked to ease the unwinding. And Switzerland’s lack of receivership showed.
They do! But it won’t tank the bank. Because they’ve been working on them for years. Because they’re still under Dodd-Frank’s liquidity coverage rules.
> Why are you blaming 2017 numpties?
They rolled back the regulations that would have, if not prevented this mess, caught it much sooner. BofA has similar issues, but it’s subjected to stress tests. As a result, the risk has been managed in a way it wasn’t at these banks.
Not at all, in fact SVB grew so quick that even with the rule in place they wouldn’t have been caught.
https://www.factcheck.org/2023/03/what-to-know-about-trump-e...
The day political parties/sides die, we can finally start living and being a fruitful country again. I literally cannot wait for that day.
Mostly. The other component is how we pretend HTM Treasuries both hold their value and are liquid. Europe marks to market daily. I think you should get to choose: mark at $1, but they don’t count as liquid, or mark to market and they contribute to your liquidity ratio. (The rollback meant nobody was measuring liquidity. SVB would have failed its LCR in March 2022.)
They literally don’t have the data to make this claim. The Fed does. SVB would have failed its LCR in March 2022.
Data please, as this says different: https://www.factcheck.org/2023/03/what-to-know-about-trump-e...
While SVB and Credit Suisse's collapses' causes are directly unrelated, depositor outflows were involved in both, as opposed to fundamental issues with their balance sheets. Credit Suisse's Tier 1 ratio was as good as that of UBS or any other big European bank. <https://www.wsj.com/articles/credit-suisses-death-gives-birt...> At the end of the day, a loss of clients' faith in a bank is something that no stress test can directly measure ahead of time.
https://www.reuters.com/business/finance/us-fed-points-finge...
I’m inclined to agree with the fed, since the 2018 change to the law is what made it legal for SVB to make the bad bet that put them out of business.
Also, they were aware of the regulation in question, since they paid lobbyists to get that specific rule rolled back specifically so that they could structure their holdings to overinvest in treasuries.
As Quarles says, the report does not actually provide any evidence of this.
Let me repeat: At 12%, SVB's Tier 1 capital ratio was well above the industry standard (5-7%). SVB collapsed because of a liquidity crisis driven by its unusual depositor industry concentration. Nothing SVB did would have been illegal pre-2018; to put another way, poor risk management is not inherently illegal, any more than any other bad investment that ends up losing money is illegal.
T1C is a solvency test. The liquidity test they were exempted from were LCRs. They would have failed that test in March 2022.
Of course you are, you’re clearly biased against the right so without even trying to disprove yourself you just automatically believe anything against them.
https://www.factcheck.org/2023/03/what-to-know-about-trump-e...