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> due to good old regular banks doing what they do best: making customers deposits disappear. What would you estimate is the total value of customer deposits t
by _2d30 4y ago
> due to good old regular banks doing what they do best: making customers deposits disappear.
What would you estimate is the total value of customer deposits that banks have loss in failure over the last say 30yrs?
- TacticalCoder 4y ago> What would you estimate is the total value of customer deposits that banks have loss in failure over the last say 30yrs? Well of course if we consider only those where loss actually happened and not those where the losses have been mutualized by bail-outs, it may not be gigantic. But, I don't know, in Cyprus hair cuts made $8 bn of customers deposits vanish. That's just one I know from the top of my head without needing to google.
- brookst 4y agoBut you seriously believe that banks are generally better at completely losing deposits than keeping them? It’s just hard to see any evidence-based person believing that.
- mirekrusin 4y agohttps://en.wikipedia.org/wiki/List_of_bank_failures_in_the_United_States_(2008%E2%80%93present) https://en.wikipedia.org/wiki/List_of_bank_failures_in_the_U...
- vkou 4y agoAnd how much money was lost in those failures by depositors? And don't fall back on 'they were bailed out'. They were bailed out by other banks buying their assets + liabilities, and by the insurance payments they were making. They weren't getting a blank check from the treasury. That's the system working. Who bailed out the crypto losses? Some of the losers got made whole, but many, many, many are realized losses.
- mirekrusin 4y agoFDIC can insure up to $100k (before 2008) and up to $250k (post-2008), so that's at most one person can get back, the rest puffs and it's gone. What crypto losses you're talking about? The ones from centralized custody operators that hold your money in arbitrary way rendering your balance on web page in crypto currency or something else?
- rtpg 4y agoIn practice since 2008 even if the theory is that it’s up to 250k in practice banks get acquired from the FDIC basically on the unspoken condition that all deposits are maintained at 100 cents on the dollar
- dragonwriter 4y agoIts not “unspoken”, its the overt goal to find a bank to take over that will provide that. But SVB is a much bigger bank with a much larger share of uninsured deposits than a typical bank failure. If the problem extends beyond liquidity and really is an insufficiency of assets by any significant share, its going to be hard for a no-loss takeover to be facilitated.
- aroman 4y ago$250k is not the most an account holder can get back if a bank fails, it is literally the minimum.
- mirekrusin 4y agoIt's the maximum bank can get insurance for.
- brookst 4y agoNo, it is the minimum , maximum, and only insurance the FDIC provides. Banks can and do get private insurance beyond that. And stop acting like any uninsured money evaporates in a bank failure. Actually probably just stop talking about banks. This whole thread is an embarrassment of “smart people with strong opinions about things they have zero knowledge about”.
- brookst 4y agoAnd that’s the majority of banks in the US, or the majority of bank customers that were affected? Seriously, it was a childish and overly dramatic comment. Stop digging.
- beefield 4y agoWould you be willing to make a honest try to compare quantitatively the percentage of deposits lost in regulated western banks vs money lost in failed crypto exchanges, stablecoins etc? I think the difference must be many orders of magnitude to the benefit of regulated banks.
- omgomgomgomg 4y agoSeems like its around 30 banks a year in the usa. Not sure about deposits, theyre relativelly covered. But shareholders get wiped out every time.
- smugma 4y agoBanks failing is pretty rare, not 30 times a year. “Silicon Valley Bank is no more. It’s the first bank backed by the Federal Deposit Insurance Corp. to fail since 2020.” https://www.marketplace.org/2023/03/10/how-silicon-valley-bank-failed/amp/ https://www.marketplace.org/2023/03/10/how-silicon-valley-ba...
- justahuman74 4y agoI would argue that `since 2020` is still too frequent for most people
- shuckles 4y agoThere was a very uncommon event that began in 2020.
- alasarmas 4y agoIf I recall correctly, Cyprus “doesn’t count” because those depositors were making something like 9% interest, and therefore they were morally closer to investors. I don’t have a citation at hand...
- shjake 4y agoBack then 9% was such a spectacular yield, “only” 2-3% above what many other more reliable Euro banks were offering
- efaref 4y agoThere was also the Icelandic bank collapse, which was multiple banks totalling tens of billions of euros. I personally lost a large chunk of savings in that, and was eventually bailed out by my own government (i.e. my own tax money).
- arcticbull 4y agoI would encourage you to learn about what actually happened in the Cypriot defaults.
- itsoktocry 4y ago>But, I don't know, in Cyprus hair cuts made $8 bn of customers deposits vanish. Ah, so less than 1 FTX?
- prewett 4y agoIt wasn't the banks doing the haircut in Cypress, it was the government. You can't blame that one on the banks.
- TomSwirly 4y agoYou are forgetting the many billions in taxpayer bailouts that have kept them alive, and the FDIC.
- AnimalMuppet 4y agoAnd who pays for the FDIC? Member banks. So the existence of the FDIC does not make the original claim any more true.