That needs to go back to the 80s to capture the SnL crisis. It dwarfs 08 in bank failures. It better indicates the conglomeration of the many banks into the few we have today.
I have faith that we can top S&L. We have the technology. We have the talent. There are six banks with over a trillion in assets in the US. I have faith that one of them has been doing some wild book cooking. I'd place a bet on Citibank, followed by Wells Fargo. There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on… shame on you. Fool me… you can't get fooled again.
I'm just hoping this time it's something absolutely outrageous just for the lulz of it all. Like, let's get some FTX-style absurdity. All the absurdity happens in crypto right now but I still have faith in regular banking. Some people still like the challenge of regulated markets.
JP Morgan is the biggest one. It can do ANYTHING it wants and get away with it.
It can make 10 billion USD spoofing gold prices for a decade and get away with a 1 billion USD fine (and keep doing it) for example.
The CEO can go on trips with Jeffrey Epstein, be friends with him and do business with him and get away with it.
It made tons of money off of the Madoff ponzi by providing Madoff with a bank account and not reporting the (from their perspective) extemely obvious ponzi that was going on for 15 years. Nobody went to jail and JP Morgan's fine was probably lower than what they made from the ponzi.
There are 100's of other examples of quite outrageous FTX-style crime. This is just what I happened to read about and remember. And that's only the publicly known stuff.
Let's turn it around: why would JP Morgan (and other big banks) NOT be engaged in extreme levels of crime that could be described as "financial terrorism"? If JP Morgan blows up it would be the end of the US and they know it and the US govt knows it. I repeat: they can get away with ANYTHING.
If you like absurdity, FTX has recovered 7.3 billion out of the 8.6 billion hole and plans on relaunching the exchange to make the last billions back in fees
Most noteworthy is that this quick 8 month turnaround is partially thanks to the blockchain, and under no new laws being passed
08 was artificially low because many banks got merged at a fire sale. Wachovia, Merrill Lynch, Bear Stearns, and National City stick out. Other financial institutions got essentially nationalized and stock became mostly worthless like Citi and AIG, although the government sold most of their stock in 2011
Credit Suisse is about the same size as SVB, Signature Bank, and First Republic combined but it got “acquired” by UBS at a price 60% below its last trading price in a deal where $17 billion of debt was wiped out so it doesn’t count here
Credit Suisse is not included because it is a Swiss bank, not an FDIC insured US bank.
Lehman Brothers is also not included because, even though it was a US bank, it was an investment bank with no FDIC insured deposits. It was around the size of all of this year's failures, combined.
As you note, bank bailouts that were not FDIC bankruptcies are also not included.
It depends on what we're trying to visualize. From an investor's perspective, a bank whose assets get sold for pennies on the dollar in a fire sale is essentially a failure. Lehmann Brothers was also a massive (investment) bank failure with huge second order effects on the economy.
This graphic seems to be modeling things from a taxpayer perspective. These banks failed and the government needed to step in to do something to ensure people could get their deposits.
Aren't there some relevant details missing from this kind of analysis? Banks failing just means that the value of the banks assets fall below the value of their deposits, right? In which case the degree to which that happens seems to be highly relevant to this kind of comparison. E.g. the value of assets falling to 50% of deposits in bank failures in financial crisis A vs 90% in financial crisis B
At the very least that’s missing Fannie, Freddie, Bear, Merrill, Lehman, TARP and arguably AIG for another 1.2T+, granted a lot of this was eventually repaid as the FDIC will be as well.
You are correct. Additionally, the size of the bank(s) are not really what matters.
I want to see the scale (sum) of what was actually lost when they went bankrupt, and how much we (the public) have to put up to keep the system from collapsing. Does anyone have an actual visualization of how much we ponied up to keep our banking system from collapsing?
Did the public just provide a reasonable interest rate loan for a few months to a year? Or was it a sweet 0% loan for...ever? The important details are lost in the media reports and it would be nice to get a sense for what really happened.
There were winners and losers, but the government made money on TARP. That doesn't fit anyone's narrative very well, so you don't hear that much about it, but its a fact. So far not a public dollar has been lost in the current crisis. FDIC, like other insurance, is paid for by the insured. Every FDIC bank in the country is paying the cost of this.
Generally speaking, it turns into free assets. The people involved usually don't acquire the assets/associated debt without some kind of guarantee.
OneWest Bank for example after 2008 had a guarantee where if the assets defaulted above a certain amount they would receive full value of the loans in a payout from the government. They were actively foreclosing on people to justify catastrophic losses to get the bailout. Not sure how that ended up since I was only marginally aware of the start of that and everything went silent once the news got wind of the perverse incentives.
In terms of trends, the bailout game has been played consistently since the the dollar went off the gold standard (1971 iirc).
The ponzi is starting to unwind now that inflationary pressures are out of control. I expect concentration to eventually lead to nationalization followed by a new currency which will fail because they lost all credibility from their mismanagement as a private entity.
That's what's happened historically with every country that debases its store of value above the point macro effects become noticable which are around 3:1 ratio).
There's argument to be made that approximately any cost to keep the system from collapsing is a trade-off worth making if the alternative is the system collapsing.
Round 2 of the 2023 bank crises might be commercial real estate loans like the 1980s crises. Some downtowns are still 40% vacant. This more a consequence of covid than bad bank behavior.
Yeah these sorts of figures always frustrate me because the historical context for these things is so much broader, and it seems obvious to me to go back to the 80s, if not earlier.
> conglomeration of the many banks into the few we have today
There are still thousands of banks in the USA. I dont really see why there should be more than 100. Canada has 5 big ones and a few dozen tiny ones. Same in UK and Australia.
It’s not all roses - in Australia and Canada the few major banks operate in pseudo-cartel fashion. There’s few enough that they can effectively collude without doing it illegally.
Deposit banks were banned from crossing state lines and investing in equities markets after the Great Depression. These limitations were removed in the 1990s.
themagician|2 years ago
I'm just hoping this time it's something absolutely outrageous just for the lulz of it all. Like, let's get some FTX-style absurdity. All the absurdity happens in crypto right now but I still have faith in regular banking. Some people still like the challenge of regulated markets.
bboygravity|2 years ago
It can make 10 billion USD spoofing gold prices for a decade and get away with a 1 billion USD fine (and keep doing it) for example.
The CEO can go on trips with Jeffrey Epstein, be friends with him and do business with him and get away with it.
It made tons of money off of the Madoff ponzi by providing Madoff with a bank account and not reporting the (from their perspective) extemely obvious ponzi that was going on for 15 years. Nobody went to jail and JP Morgan's fine was probably lower than what they made from the ponzi.
There are 100's of other examples of quite outrageous FTX-style crime. This is just what I happened to read about and remember. And that's only the publicly known stuff.
Let's turn it around: why would JP Morgan (and other big banks) NOT be engaged in extreme levels of crime that could be described as "financial terrorism"? If JP Morgan blows up it would be the end of the US and they know it and the US govt knows it. I repeat: they can get away with ANYTHING.
I think you will get your lulz.
yieldcrv|2 years ago
Most noteworthy is that this quick 8 month turnaround is partially thanks to the blockchain, and under no new laws being passed
RoddaWallPro|2 years ago
George W gaffes have become so hilarious to me, now that they're 15+ years in the past. I laughed out loud reading this one.
edrxty|2 years ago
I totally buy it too.
FormerBandmate|2 years ago
Credit Suisse is about the same size as SVB, Signature Bank, and First Republic combined but it got “acquired” by UBS at a price 60% below its last trading price in a deal where $17 billion of debt was wiped out so it doesn’t count here
btilly|2 years ago
Lehman Brothers is also not included because, even though it was a US bank, it was an investment bank with no FDIC insured deposits. It was around the size of all of this year's failures, combined.
As you note, bank bailouts that were not FDIC bankruptcies are also not included.
rrrrrrrrrrrryan|2 years ago
This graphic seems to be modeling things from a taxpayer perspective. These banks failed and the government needed to step in to do something to ensure people could get their deposits.
DonsDiscountGas|2 years ago
1980s S&L crisis: $654 Billion (summed 1984-1992 failures) across 23 banks
2008 crisis: $733 Billion (summed 2008-2011 failures) across 61 banks
2023 so far (it's only May): $556 Billion (Signature + SVB + FRC) across 3 banks.
It looks like 2008-2011 is the "winner", although other commenters have mentioned forced mergers etc. may not be counted.
https://en.wikipedia.org/wiki/List_of_largest_bank_failures_...
dnissley|2 years ago
haldujai|2 years ago
boringg|2 years ago
fragsworth|2 years ago
I want to see the scale (sum) of what was actually lost when they went bankrupt, and how much we (the public) have to put up to keep the system from collapsing. Does anyone have an actual visualization of how much we ponied up to keep our banking system from collapsing?
Did the public just provide a reasonable interest rate loan for a few months to a year? Or was it a sweet 0% loan for...ever? The important details are lost in the media reports and it would be nice to get a sense for what really happened.
jeremyjh|2 years ago
https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program
than3|2 years ago
OneWest Bank for example after 2008 had a guarantee where if the assets defaulted above a certain amount they would receive full value of the loans in a payout from the government. They were actively foreclosing on people to justify catastrophic losses to get the bailout. Not sure how that ended up since I was only marginally aware of the start of that and everything went silent once the news got wind of the perverse incentives.
In terms of trends, the bailout game has been played consistently since the the dollar went off the gold standard (1971 iirc).
The ponzi is starting to unwind now that inflationary pressures are out of control. I expect concentration to eventually lead to nationalization followed by a new currency which will fail because they lost all credibility from their mismanagement as a private entity.
That's what's happened historically with every country that debases its store of value above the point macro effects become noticable which are around 3:1 ratio).
TheSpiceIsLife|2 years ago
peter303|2 years ago
derbOac|2 years ago
There's a better figure here I think:
https://www.pewresearch.org/short-reads/2023/04/11/most-u-s-...
Also some nice figures here:
https://www.bankingstrategist.com/history-of-us-bank-failure...
kibibyte|2 years ago
pranshum|2 years ago
rr808|2 years ago
There are still thousands of banks in the USA. I dont really see why there should be more than 100. Canada has 5 big ones and a few dozen tiny ones. Same in UK and Australia.
dalyons|2 years ago
peter303|2 years ago
a3w|2 years ago
cyclecount|2 years ago