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How do you expect Dodd-Frank to prevent every regional bank depositor with half a brain cell attempting to move their deposits to a big 4 first thing Monday mor

How do you expect Dodd-Frank to prevent every regional bank depositor with half a brain cell attempting to move their deposits to a big 4 first thing Monday morning? Do you understand the consequences of that? If that happens, dozens and perhaps eventually hundreds of regional banks will fail and many many more depositors will be out money.

dragontamer 4y ago
Do you understand how crap SIVB's books were? 50%+ held to maturity? Long dated 10Y and 30Y bonds? A complete lack of a Risk Officer from April 2022 through January 2023? Given how utterly terribly SIVB was run, I'm not exactly expecting a major issue come Monday. I'm looking at the books of like Ally Bank, and they're way better. https://d18rn0p25nwr6d.cloudfront.net/CIK-0000040729/f4eb4064-f7ec-4ee1-962f-fe4b69d8a58d.pdf https://d18rn0p25nwr6d.cloudfront.net/CIK-0000040729/f4eb406... ---------- If there are other banks as poorly run as SIVB, they probably do deserve to collapse. But I also don't expect there to be many banks with that level of stupidity. At Silicon Valley Bank, we're basically looking at a bank, whose Risks were completely slept on during the entire period of the fastest rising federal funds rate in the last half-century. (Or really, the position of Chief Risk Officer was vacant for this entire period). I assume the other banks had better risk management.
- schrodinger 4y ago
  Mostly agree, but panic isn't always rational and I suspect most people will react emotionally rather than look at their bank's books like you did.
  - dragontamer 4y ago
    If the banks books are solid, they should survive a 25%ish decline in deposits, which was roughly the level of SIVB on Thursday. I don't expect a 25% decline across the industry however. The knock-on effects will be smaller. With a smaller "shockwave" of runs, combined with stronger bank fundamentals, I really don't think we're looking at a big domino-effect 2008-like collapse here.

dragontamer 4y ago

Do you understand how crap SIVB's books were? 50%+ held to maturity? Long dated 10Y and 30Y bonds? A complete lack of a Risk Officer from April 2022 through January 2023? Given how utterly terribly SIVB was run, I'm not exactly expecting a major issue come Monday. I'm looking at the books of like Ally Bank, and they're way better. https://d18rn0p25nwr6d.cloudfront.net/CIK-0000040729/f4eb4064-f7ec-4ee1-962f-fe4b69d8a58d.pdf https://d18rn0p25nwr6d.cloudfront.net/CIK-0000040729/f4eb406... ---------- If there are other banks as poorly run as SIVB, they probably do deserve to collapse. But I also don't expect there to be many banks with that level of stupidity. At Silicon Valley Bank, we're basically looking at a bank, whose Risks were completely slept on during the entire period of the fastest rising federal funds rate in the last half-century. (Or really, the position of Chief Risk Officer was vacant for this entire period). I assume the other banks had better risk management.

schrodinger 4y ago
Mostly agree, but panic isn't always rational and I suspect most people will react emotionally rather than look at their bank's books like you did.
- dragontamer 4y ago
  If the banks books are solid, they should survive a 25%ish decline in deposits, which was roughly the level of SIVB on Thursday. I don't expect a 25% decline across the industry however. The knock-on effects will be smaller. With a smaller "shockwave" of runs, combined with stronger bank fundamentals, I really don't think we're looking at a big domino-effect 2008-like collapse here.