Three out of five largest bank failures in the United States happened in the past two months (SVB, Signature, and First Republic):
https://en.wikipedia.org/wiki/List_of_largest_bank_failures_...
It's not entirely fair to compare bank failure sizes across times, even inflation adjusted [1]. The rate of asset price growth since 2008 far outstrips inflation.
IMO the frequency of bank failures is more worrying. They tend to come in waves [2].
1: On the size of bank failures: https://yarn.pranshum.com/banks 2. On the frequency of bank failrres: https://yarn.pranshum.com/banks2
> Most banks hold more assets than deposits. So in theory, depositors should always be made whole.
No such theory is established; it's the central bank's money printing ability that can always make depositors whole. In the US, the Federal Reserve implicitly backs the Federal Deposit Insurance Corporation.
The FDIC holds an adequate deposit insurance fund, financed by banks who must buy FDIC insurance. It's over $100 billion dollars, which is enough to weather some major failures. With large failures, the FDIC may issue special assessments to maintain the fund at a safe level (they did this with SVB).
[1] https://www.wsj.com/articles/moodys-downgrades-11-regional-b...
It was never capped in any hard manner, remember the fine print is "up to at least" $250,000.00.
The limit can be as high as the FDIC's feeling that particular day, the only thing set in stone is the floor of $250,000.00.
as long as the payout doesn't exceed the FDIC's funds
its a $100 billion fund insuring $14 trillion in deposits...
Backed by the full faith and credit of the United States. (As well as what looks like the Fed [1].)
[1] https://bpi.com/the-mysterious-footnote-7-to-whom-and-on-wha...
$4T in debt for the US is bearable. Between a $23T GDP and being constitutionally obligated to pay those debts as they come due, it's not really an issue. There's probably a lot of fraud in government programs, but that money still gets spent in the economy that financed the loan.
The issue is deficits. Those can go up in times of crisis, but end up bolstering the nation's ability to pay, so it's not all bad. I have near complete contempt for what passes for political parties in the US but, historically speaking, the way to go if you care about reducing the debt is Democrats. They consistently wipe out the deficit and set us on a path to paying it down just in time for Republicans to take over and flip it back to red with tax cuts and set the stage for crisis with deregulation. Democrats might raise the debt, but it's usually to deal with a crisis.
Watch that space for when supply catches up and we start figuring out better pandemic management after the next killer wave. The road ahead is bumpy, but I see wise investments paying off as long as some idiot doesn't get into power and start cutting taxes for people who don't need them again.
The people who keep loaning money to the government at least don't seem worried because they keep doing it.
Technically, the FDIC has to find the failure to be systemically important. Legally, nobody defined what that process should be, so you are in practice correct.
> All depositors of First Republic Bank will become depositors of JPMorgan Chase Bank, National Association, and will have full access to all of their deposits.
(Matt Levine et al have argued that the SV VC community should have taken over more, or indeed any, of the rescue role, since they were responsible for overweighting SVB and then bankrunning it. But that hasn't happened)
Ish. The loss-sharing transaction does involve the FDIC taking risk [1]. They claim they will settle up actual losses with special assessments on their members. And there may be no losses at all. But there is definitely risk being assumed by the FDIC, an entity backed by the full faith and credit of the United States.
It also looks like the FDIC is providing JPMorgan with a $50bn term loan [2]. (Shout out to snake_doc [3].)
[1] https://www.fdic.gov/resources/resolutions/bank-failures/fai...
[2] https://www.jpmorganchase.com/ir/news/2023/jpmc-acquires-sub...
If it ran out of money, it's nearly certain the government would step in to cover the shortfall.
There is a search feature on archive.is, which so far hasn't failed me when I looked for links on these somewhat popular paywalled sites.