Banks Failing: Is It 2008 Again?

[theyankel]

Likely just rumors

you've been quiet 

[ExGingi]

https://www.bloomberg.com/opinion/articles/2023-03-13/banking-s-next-threat-it-might-be-commercial-real-estate

https://archive.md/YvH13

[EliJelly]

you've been quiet 

My positive spirit didn't disappoint   

https://forums.dansdeals.com/index.php?topic=126887.msg2694450#msg2694450

[aygart]

https://www.wsj.com/articles/fdic-planning-another-svb-auction-d63c8929

[mevinyavin]

it may not be optional but it’s not because it’s the law. Banks do not need to be fdic insured, they just won’t have any costumers

It might be illegal to have costume-ers in banks. I'm not sure if COVID made it permanently legal to wear masks or if masks are also not allowed - or any other kind of costume.
 

[Moshe123]

First Republic is up 18% in pre market.

[hvaces42]

First Republic is up 18% in pre market.

Down 60% yesterday

[aygart]

https://www.cnn.com/2023/03/14/investing/moodys-us-banks-downgrade/index.html

A bit late to the game

[ExGingi]

https://www.cnn.com/2023/03/14/investing/moodys-us-banks-downgrade/index.html

A bit late to the game

What else is news? Reminiscent of 2008.

[shwarmabob]

https://www.cnn.com/2023/03/14/investing/moodys-us-banks-downgrade/index.html

A bit late to the game

At least they are consistent: they are always late. They were late in 2008 they are late now.

[shwarmabob]

Credit Suisse is wobbly 

[Abey]

The incentive to bank execs is not depositor funds but their own equity which is getting wiped out as it should.

What I think you are going to see going forward is huge salaries to execs which keeps money out of the “bank”. Mark to market, and maybe a law on how much of historic deposits they are allowed to put in long term investments is what’s needed. Although the next crash will be a different risk we didn’t perceive.

[Moshe123]

Down 60% yesterday

Up 45% now

[S209]

The incentive to bank execs is not depositor funds but their own equity which is getting wiped out as it should.

Yes and no. Being able to lure customers who aren’t afraid of any risk is definitely an incentive in and of itself and will encourage more risky behavior than otherwise though surely they care more about equity. However equity still might only get hit when a bank fails, as risky investments not turning into bank runs/illiquidity (because depositors aren’t afraid) can still reward the banks as long as they don’t actually go bankrupt.

[Abey]

Mark to market is helpful for bonds, but not so realistic for real estate and other illiquid assets,

If you need to be realistic with customers withdrawing funds then you need to be realistic with what it’s worth today on the market as we see all these fugazi math is an issue that would’ve forced execs to deal with this a lot earlier and likely prevent the run

[CountValentine]

Although the next crash will be a different risk we didn’t perceive.

...and that folks sums it up!!!

[yelped]

Credit Suisse is wobbly 

For a long time already...

[Moshe123]

Up 45% now

up 58%

[Abey]

If you need to be realistic with customers withdrawing funds then you need to be realistic with what it’s worth today on the market as we see all these fugazi math is an issue that would’ve forced execs to deal with this a lot earlier and likely prevent the run

I’d be ok with say a monthly mark to prevent sudden volatility and death spiral also perhaps a time frame to correct assets but did you know SVB had 7B of venture debt on their sheets ? With recent tech downturn you can be sure it was worth a fraction of that but opacity allowed them to hide a stinking carcass.

[Euclid]

I’d be ok with say a monthly mark to prevent sudden volatility and death spiral also perhaps a time frame to correct assets but did you know SVB had 7B of venture debt on their sheets ? With recent tech downturn you can be sure it was worth a fraction of that but opacity allowed them to hide a stinking carcass.

ELI5 please. What's mark, and mark to market?