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Bank Failures Visualized
- velvet564 4y ago[dead]
- velvet564 4y ago[dead]
- thehumanmeat 4y agoThat 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.
- FormerBandmate 4y ago08 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
- btilly 4y agoCredit 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.
- jeremyjh 4y agoI think GP knows this, but I also think you know that the graph is trying to paint a particular picture, and that picture is misleading because a lot of information is missing. We are not in the midst of a financial crisis that approaches 2008, and the graph is trying to make us think something different.
- btilly 4y agoI know nothing of the sort. I think someone found an interesting dataset, tried to visualize it, and thought it looked interesting. I doubt that there was any motive to the dataset other than, "Here's what I get from the FDIC, what does it look like?" Then shared code and source so that anyone else could reproduce it. If you can find another data source that gives a fuller picture, you should. But compiling these data sources takes work. And the ones you get are all going to be a particular slice that represents some things but not others. I did not personally find it misleading.
- lazide 4y agoNot in an ‘08 sized crisis - yet. Wait until commercial property debt finally ‘looks down’. It’s been running off the cliff for a long time already, and is in exactly the same boat as the securities that took out SVB, etc.
- igravious 4y agoAnd Bear Sterns?
- FormerBandmate 4y agoI know all of that, but they are still important caveats. We are not in a worse place than 08 (yet)
- rrrrrrrrrrrryan 4y agoIt 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.
- jeremyjh 4y agoFDIC premiums are not payed by taxpayers. What we're visualizing here are bank failures assumed by FDIC. The too big to fail banks didn't technically fail, but to give an accurate picture of a financial crisis they should be on the graph.
- haldujai 4y agoAgree, this representation also makes WaMu’s failure look like the worst in recent history but it felt like one of the smaller problems at the time with what was going on with the investment banks, Fannie/Freddie and AIG.
- _heimdall 4y ago> FDIC premiums are not payed by taxpayers Tax payers are legally required to pay taxes in USD. I'm not actually sure if the IRS technically accepts cash but if so it would be extremely rare. Meaning all tax payers have a bank account and ultimately foot the bill even though it is technically funneled through the banks' books first.
- majormajor 4y ago"Footing the bill by having a bank account" is one of those very-hard-to-picture-or-feel things in days when most bank accounts are "free" and these banks have so many lines of business. E.g. am I paying for FRBs bailout by increased loan application fees if I buy a house or car or such? That's what I'd imagine, or maybe it's just that maybe otherwise savings accounts would pay a bit more interest or something?
- themagician 4y agoI 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.
- yieldcrv 4y agoIf 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
- senectus1 4y agowth? you got a good link for this? I stopped paying attention a while ago
- readthenotes1 4y ago[dead]
- yieldcrv 4y agoreuters good enough? https://www.reuters.com/technology/bankrupt-crypto-exchange-ftx-has-recovered-73-bln-assets-attorney-2023-04-12/ https://www.reuters.com/technology/bankrupt-crypto-exchange-...
- senectus1 4y agoits kinda lite on details, but i guess "Cash and liquid crypto assets" says enough. I think the claim they have "recovered 7.3 billion" is an overstatement... but time will tell.
- derbOac 4y agoYeah 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. There's a better figure here I think: https://www.pewresearch.org/short-reads/2023/04/11/most-u-s-bank-failures-have-come-in-a-few-big-waves/ 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-failures https://www.bankingstrategist.com/history-of-us-bank-failure...
- DonsDiscountGas 4y agoGoing by Wikipedia, in 2021 dollars I count: 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_in_the_United_States https://en.wikipedia.org/wiki/List_of_largest_bank_failures_...
- boringg 4y agoThat on 2022 dollars?
- dnissley 4y agoAren'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
- pjc50 4y agoIn most of these cases the fall is to 99% of the value, because that's the point at which they have to cease trading.
- haldujai 4y agoAt 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.
- DonsDiscountGas 4y agoNone of those are consumer banks. Every dataset has to make scope decisions.
- rr808 4y ago> 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.
- peter303 4y agoDeposit banks were banned from crossing state lines and investing in equities markets after the Great Depression. These limitations were removed in the 1990s.
- dalyons 4y agoIt’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.
- peter303 4y agoRound 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.
- fragsworth 4y agoYou 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.
- than3 4y agoGenerally 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).
- TheSpiceIsLife 4y agoThere'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.
- jeremyjh 4y agoThere 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. https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program
- pranshum 4y agoI wrote a post about this. The frequency of failures was much higher but the individual failures were smaller: https://yarn.pranshum.com/banks2 https://yarn.pranshum.com/banks2
- a3w 4y agosaturday night life crisis?
- cyclecount 4y agoSavings and loan crisis https://en.wikipedia.org/wiki/Savings_and_loan_crisis https://en.wikipedia.org/wiki/Savings_and_loan_crisis
- lisasays 4y agoA veritable Mandelbrot Set of failure
- 5kg 4y ago<del> r should be sqrt(assets). </del> It is.
- loeg 4y agoAre the assets inflation-adjusted, also?
- DonsDiscountGas 4y agoOr else replaced with a fixed-width rectangle and scale the height by assets. Would fit more easily on a timeline and humans are much better at comparing heights than we are areas.
- mbo 4y agoyour wish is my command: https://observablehq.com/@mjbo/bank-failures-as-a-stacked-bar-chart https://observablehq.com/@mjbo/bank-failures-as-a-stacked-ba...
- DonsDiscountGas 4y agoNice!
- jeffbee 4y agoIt is! That's the default radius type for the dot mark on Observable Plot. To play with it, add `type: "linear"` to the dict on line 6.
- 5kg 4y agoThanks. I guess rename 'r' to 'area' will make it easier to read.
- PheonixPharts 4y agoI generally love Mike Bostock's work, and this is a beautiful visualization, but I think this comment points out why circles are just a bad way to represent anything visual other than pizzas: it's a leaky abstraction (which is a real sin in visualization) You have to know how the chart is generated in order to correctly interpret what you're seeing. The value can be the radius, diameter (how pizzas are measured) or the area itself! All of these choices lead to different interpretations of what you're seeing. Then, on top of that, we're just not great and visually comparing areas. Pizzas are a great example of this. A 12" pie and a 16" pie don't look that different but you're talking about nearly twice the amount of pizza! A good example in this visualization is Signature vs SVB Then on top of that we have the dimensions of the circle forcing the visual to overlap on the x-axis without this meaning anything concrete. All that you can meaningfully take away from this visually is "2008 had one big and a ton of small failures, and currently we're seeing 3 big, but not quite as big failures", and unfortunately there's not a lot more you can get out of this. Because of the x-axis problem it's hard to even tell if WaMu preceded some of the others or not.
- frgtpsswrdlame 4y agoHm? Where's Lehman?
- DonsDiscountGas 4y agoI think this is just consumer (ie FDIC) insured banks, Lehman was an investment bank.
- riskneutral 4y agoThis needs to be re-expressed as a % of GDP to be useful. And as already pointed out, the largest of them (Lehman) is missing
- FormerBandmate 4y agoLehman Brothers isn’t technically a bank failure. It was an investment bank that went bankrupt, it had zero FDIC involvement
- Findeton 4y agoAnd Credit Suisse although it's not on the US.
- WatchDog 4y agoConstantly impressed by Mike Bostock's work.
- csense 4y agoI feel like it should include earlier time periods (80's? Depression?), and have some adjustment for different times. I'm not enough of an expert to guess whether to use inflation adjusted dollar amounts (using what inflation metrics?), or as a % of GDP, or a % of the banking system..
- rr808 4y agoTotal number of FDIC banks over time is listed here: https://banks.data.fdic.gov/explore/historical?displayFields=STNAME%2CTOTAL%2CBRANCHES%2CNew_Char&selectedEndDate=2022&selectedReport=CBS&selectedStartDate=1934&selectedStates=0&sortField=YEAR&sortOrder=desc https://banks.data.fdic.gov/explore/historical?displayFields...
- steve_adams_86 4y agoAre there no small failures this time around because of ongoing consolidation? This seems to be a dominant trend in economics across the board. Does anyone have a good answer why?
- krona 4y agoThe trend is a form of preferential attachment. https://en.wikipedia.org/wiki/Preferential_attachment https://en.wikipedia.org/wiki/Preferential_attachment
- rrrrrrrrrrrryan 4y agoSome midsize banks got a massive inflow of deposits during the pandemic and they didn't know what to do with the money, so they parked it in "safe" investments like mortgage backed securities. Then when the pandemic subsided, people started burning down their savings accounts, and interest rates started skyrocketing. All the banks' money was tied up in all these 30-year mortgages that nobody wants anymore because they're paying like 2.5% and inflation is 8% now, but they're still forced to sell them for terrible prices just to keep their ATMs full. Eventually word gets out about what's happening, there's a bank run, and the bank starts death spiraling. Massive banks have nothing to worry about because if the government allows them to fail they'll take the entire economy down with them. And (presumably) smaller banks weren't under the same pressure from investors to generate returns on idle capital, so they didn't commit the same sins as the midsize banks.
- tickerticker 4y agoSVB's fail was because of radical speed in deposit inflow, which was invested in fixed rate bonds just at the moment that the Fed was on a rising rate ratchet. Because of an affluent clientele, they had unusually high % of uninsured deposits. Very unlikely that a small bank would have had the need to layoff so many deposits in such a short time span. Very unlikely that a smaller bank would have had the high % of uninsured deposits. These are the funds that jump ship immediately. First Republic fail was because of large pool of fixed rate assets....(jumbo low-rate mortgages and Treasury Notes) in a rising rate context. They also had an affluent clientele and thus a high % of uninsured deposits. The fixed rate assets lost so much value while rates rose, that they had no tangible equity. Thus, the hot money deposits raced out of the bank. Smaller banks typically don't have such a concentration of affluent customers, which means that more of their clientele would be under the threshold for FDIC insurance. Smaller banks probably have a good book of commercial loans which are commonly priced at a variable rate. I am baffled that SVB and FRB did not hedge their fixed rate portfolios with interest rate swaps....Maybe their mind was on staying abreast of the white-hot tech sector instead of wringing their hands about the next Fed rate decision.
- ausudhz 4y ago"too big to fail"
- photochemsyn 4y agoCommunity-scale banks (aka credit unions) are a better idea for local-regional communities (aka cities and towns and agricultural regions) because their managers have to live with their clients. Take a community of 100,000 families, in an economic system where they're all collecting income and paying bills and so on. The idea behind a bank is that they hold the community's money securely while making their own money by providing loans at a greater interest rate than the interest rate they pay out to their depositors. Fundamentally, this means the bank is dependent on the fact that customers don't try to withdraw all their money at once (as the above dynamic means the bank is never able to meet this demand). FDIC guarantees by governments are intended to bolster this customer trust, as if everything goes sour the deposits (to a certain limit) are guaranteed. The important point is that the regional bank has a profit model based on giving successful loans to individuals and small businesses for things like houses, cars, business expansion, etc. The bank will of course want to know a fair amount about the people they are loaning to (drug addicts are not good bets, etc.) in order to ensure they get paid back. I hear people laughing in the background about the naivete of this picture in the modern American financial system. Since this post is already a bit long, go watch the movies "Margin Call" and "The Big Short" to get an idea of what's actually been going on.
- Night_Thastus 4y agoI've always used a credit union, and I love it! I can easily get a real person in front of me, there's not a million layers of bureaucracy, and most importantly - no bullshit fees. I don't constantly get my bank drained just for having an account in the first place.
- Scoundreller 4y agoTo join mine, I bought a $5 share (as a minor) and continue to get a $5 dividend many many years later (but I gotta close the account to get the accrued dividends...). I gotta go to the AGM one day. I hear it's catered.
- cperciva 4y agoThe model you describe is exactly why S&L happened. Small banks with highly correlated deposits holding their own loan books is a recipe for maximizing vulnerability to economic shocks. Interest rates go up and the loan book loses value; the local housing market drops and the loans get foreclosed and lose value; a major local employer goes out of business and depositors all start pulling their money out instead of reliably depositing paychecks. Banks don't work that way any more because it's a really bad way to run a bank.
- WeylandYutani 4y agoSome people want smaller banks because "too big to fail". While those same people are already freaking out when two banks fail. I'm taking the downvotes: just open an account at JPMORGAN. Banking is serious business your artisanal cornershop credit union can't hack it.
- stall84 4y agoThat is quite discouraging. Thank you. (no that is an awesome UI.. but dang..)
- attentive 4y agoIs this inflation-adjusted to compare to 2008 dollars?
- djbusby 4y agoWould be cool to compare the dollar-of-fail as % of GDP at the time. Finance is all about ratio after all.
- momofuku 4y agoFor the life of me, I'm not able to understand why none of these lists include Lehman Brothers? A commenter below posted: >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. So does this mean, that since Lehman had no customer deposits, it doesn't count?
- SeanAnderson 4y agoWell, they're visualizing a dataset from the FDIC. So, it's more like it doesn't count due to a technicality. It's not clear to me if there's an "official" dataset that includes all non-FDIC institutions.
- djbusby 4y agoFor this dataset, yes. It's only got deposit banks (afaict)
- mywittyname 4y agoLehman had no FDIC-insured accounts. So it shouldn't be included in a list of failures managed by the FDIC, because it wasn't. The liquidation of Lehman was handled by the Treasury department (and a bankruptcy court), not the FDIC, and Congressional involvement was necessary to pass a bill to finance the resulting "bailout". The FDIC maintains its own fund to pay back depositors. It might sound like a pointless technicality, but it's really not. It would be like asking why an NHSTA report doesn't include plane crashes.
- EGreg 4y agoSo basically, a ton of more failures in teh past, now it's slowed down but we are losing our stuff over it?
- rout39574 4y agoI'd say, "Our few failures now, which we think of as plausibly just the leading edge, are already comparable in size to the _entire_ 2008 cascade." Losing stuff now seems... premature, but not insane.
- haldujai 4y agoThis is not even remotely close to 2008… This figure conveniently excludes the largest 6 failures of 2008, TARP, and major international banks and insurers simultaneously affected. As a reference the prospect of AIG failing without a bailout was so significant it became an international issue threatening both US and EU economic stability. SVB and FNB are borderline irrelevant in comparison. The amounts reflected in SVB and FNB are also exaggerated as the money isn’t “lost” as if parent can obtain liquidity elsewhere (via government or merger) the asset will return principal + interest at maturity.
- 6451937099 4y ago[dead]
- 6451937099 4y ago[dead]
- yalogin 4y agoWeird part about this whole thing is, we have been repeatedly told that banks are good and they learned a lesson in 08. Now both tech and banking are in trouble again.
- echelon 4y ago> we have been repeatedly told that banks are good and they learned a lesson in 08 This is a wholly different lesson. In 2008, banks were making bad investments. In 2023, the changing interest rate environment caused good investments to become worth less than their original value. If held to term, things would be fine, but liquidity issues put stress on the system. These are not the same, and we have better means of dealing with this problem. SVB and First Republic were handled appropriately. Investors written down to zero, depositors made whole. The future banking system will be even more robust after having learned this new lesson. I've no doubt that we'll have regulations that demand a better mix of investments that are regularly audited and stress tested. We as a society also have to stop thinking of banks as a means to earn interest on deposits. Chasing the best rate has led to this problem. Deposits are liabilities.
- anecdotal1 4y ago> In 2023, the changing interest rate environment caused good investments to become worth less than their original value. They were not good investments
- candiddevmike 4y agoWhat lesson are they going to learn? Go big or go home? I don't foresee any kind of legislature becoming law over this, especially with our divided government.
- melenaboija 4y agoThat banks need better capital planning and regulations around it need to be tighter.
- Mistletoe 4y ago
- beginnings 4y agoNational governments should control their own money, scrap interest entirely. Let the market decide what each currency is worth for international trading. The status quo international banking system is designed to enslave, and governments can't do anything about it because the banks are above them. How anyone can defend the current system is beyond me. It's not remotely close to being the best we can do, it's a scam at every level, way more complicated that it needs to be, by design.
- highwayman47 4y agoWhat is the alternative?
- beginnings 4y ago[flagged]
- lottin 4y ago> National governments should control their own money, scrap interest entirely. Let the market decide what each currency is worth for international trading. Isn't this how the current system already works? Except for the "scrap interest entirely" part, which I'm not sure know what it means.
- beginnings 4y agoNo, governments don't control the money printing machines. Scrapping interest means that when the money is loaned after being printed, there isn't a debt attached to it.
- lottin 4y agoI don't think that this makes any sense. Debt is inherent to the act of lending. A loan that doesn't have a debt attached to it isn't a loan, it's a donation.
- 4y ago
- kypro 4y agoWould be slightly more insightful if it was inflation adjusted. The circles on the right should be ~30% smaller.
- smashem 4y agoAnd how about relative to M1 money supply?
- littlestymaar 4y agoComparing to M1 doesn't make much sense, but “total bank assets” roughly doubled in the meantime: https://fred.stlouisfed.org/series/TLAACBW027SBOG https://fred.stlouisfed.org/series/TLAACBW027SBOG
- _heimdall 4y agoThe definition of M1 and M2 money was changed in May 2020, conveniently right as the government started printing money for their pandemic response.
- kasey_junk 4y agoBut inconveniently long after savings accounts started being demand deposits due to online bill pay, atms and easy access to electronic funds transfers. If you are going to complain about changing the definitions you should complain that they did it too late.
- _heimdall 4y agoYep you raise a great point, but I'm not quite sure how I'd peg the "right" time for them to have changed the definition. Whenever the definition is changed at a minimum it means historical data can't be compared easily across the different definitions. My main point here was simply that comparing M1 or M2 money between now and anytime prior to May 2020 is likely not a useful number.
- vukadinovic 4y ago
- tempestn 4y agoLooking at this, it seems even more odd that no tiny banks have failed along with these larger ones.
- AYBABTME 4y agoIt's just a matter of visibility. The failed banks so far were all family of the tech industry. Since the tech industry is so far one of the most impacted by contracting conditions, its banks are being poked at first. Now that it's done, the other banks are going to get some love.
- fwlr 4y agoHighly suggest sorting by date rather than size. Putting the smallest failures at the top causes a little bit of an optical illusion making the first tower appear smaller than it really is. It also highlights that whatever is happening here is drastically different than what happened in 2008 - here we have three “big bank” failures while 2008 had only one, but we have zero “little bank” failures while 2008 had hundreds.
- haldujai 4y agoThe difference is this is missing the biggest failures of 2008 (Lehman, Bear, Merrill) as well as Fannie, Freddie, AIG and TARP.
- jbverschoor 4y agoIndeed. Many factors make me distrust the author about his intentions and bias (great mongering)
- JoeAltmaier 4y agoYes, yes, inflation changes things (a little) but the glaring result is, these bank failures are massive, significant and unprecedented. We can find historical failures of adjacent institutions but clearly something new is happening?
- haldujai 4y agoIf two regional banks failing with little realized loss is massive and unprecedented how would you describe 2007-2008 when the entire world economy was brought to its knees with napkin math ~1.2T of bailouts/failures in the US let alone Europe with several banks nationalized (e.g. UBS and RBS) and nation states defaulting on debt?
- JoeAltmaier 4y agoFrom the linked graph, recent bank failures of this kind rival that entire event. And we're probably not done.
- haldujai 4y agoThis graph only shows consumer banking failures which captures a tiny fraction of the financial institution failures in 2008. Additionally, this dataset by definition doesn’t consider the several financial institutions (including much larger consumer banks) that were deemed “too big to fail” and were therefore not allowed to fail and didn’t make this list. Finally, this graph reports deposits which are not “lost” in a bank run, the bonds still have their original value if they can be held to maturity. The actual cost to the government/FDIC will be no where near what the total deposits number is. But for context here are some much larger numbers following the same criteria: Fannie Mae and Freddie Mac had $5T in mortgage backed securities and debt when they went under. AIG was backstopping some ~$600B in financial instruments for banks and needed a $180B bailout. Lehman had ~600B in AUM at bankruptcy. Then add 40% to every number for inflation.
- JBiserkov 4y agohttps://www.fdic.gov/bank/historical/bank/index.html https://www.fdic.gov/bank/historical/bank/index.html
- d--b 4y agoHere is a forked version that includes Lehman Brothers: https://observablehq.com/d/dfe4257c84256e26 https://observablehq.com/d/dfe4257c84256e26
- a3w 4y agoNice. I thought WhoTF is Washington Mutual?
- adasound 4y agoJesus Tap-dancing Christ
- dilippkumar 4y agoI’m stealing this excellent phrase.
- nologic01 4y agoIt makes perfect sense to focus on events defined in a uniform way across the dataset (in this instance US FDIC insured bank failures). Otherwise what you are depicting is an arbitrary collation of events that may have very different causes. What I derive from the visualization (btw Bostock is a genious) are a couple of simple yet still tentative observations: * A new cluster of failures might be forming. The pattern of correlated failure is not new and it may point to similar business models and/or exposure to the same factors. Measurable correlation may also imply some level of contagion. This is defined as one event increasing the chances of another (after conditioning on common factors). But it is anybody's case what the fully developed phenomenon will look like. Three events is still small number statistics. Dont run an AI model on this. * There is at this point a remarkable absence of small bank failures. If this persist it hints that it is actually not the vanilla banking model (and poor risk management) that underlies what is happening, but more idiosyncratic factors that are specific to a few actors. In some sense that would be good news. One thing is for sure. The crisis will be properly visualized.
- theteapot 4y ago> There is at this point a remarkable absence of small bank failures. Not sure it's that remarkable? 1. not adjusted for inflation as others have commented. 2. There are less banks in the US, maybe up to 1/2 as many as in 2008 (https://www.statista.com/statistics/184536/number-of-fdic-insured-us-commercial-bank-institutions/ https://www.statista.com/statistics/184536/number-of-fdic-in...). 3. You may only be seeing the leading edge of something similar to 2008-2010 range - too early to tell.
- nologic01 4y agoFor a qualitative discussion of what might be happening inflation is a just a nuisance factor. There are other similar factors (e.g the size of the economy is not constant either) that we can ignore for this purpose. The bank size distribution is more relevant but 50% of a large number is still a large number. You'd expect this to somehow show up in the statistics. Timing is indeed a key aspect. The actors involved have quite a bit of discretion and options and it takes time for all these to play out. But if it does transpire that small banks are not as seriously affected as in the last crisis and its more of a "middle class" bank disease this would be a strange new thing.
- 0xDEF 4y agoBoth SVB and Signature Bank were atypical banks with atypical depositors. SVB catered to risky tech startup and Signature Bank was involved in risky crypto shenanigans. On SVB: >As a regional bank in the Bay Area, SVB offered services specifically designed to meet the needs of the tech industry, and soon became the largest bank by deposits in Silicon Valley and the preferred bank of almost half of all venture-backed tech startups. On Signature Bank: >By 2021, cryptocurrency businesses had represented 30 percent of its deposits. >Banking officials in the state of New York closed the bank on March 12, 2023, two days after the failure of Silicon Valley Bank (SVB). After SVB failed and in light of the closure of the cryptocurrency-friendly Silvergate Bank earlier in the week, nervous customers withdrew more than $10 billion in deposits. First Republic Bank was also an atypical bank that offered high interest rates for high-net-worth depositors by not insuring deposits and having a very high loan-to-deposit ratio: >Fitch Ratings and S&P Global Ratings downgraded First Republic's credit rating, citing "a high proportion of uninsured deposits" from wealthy customers who are more likely to move their money elsewhere and a loan-to-deposit ratio of 111%, meaning that it had lent out more money than it had in deposits from customers.
- robocat 4y agoSure, outliers will fail first. That doesn’t say much about whether there are vanilla banks about to fail.
- dan1234 4y agoSo is this just a problem with the US banking system, or are banks in other regions failing too?
- kzrdude 4y agoCredit Suisse failed recently too
- ShaurAsar 4y ago[dead]
- mjfl 4y agowhat about lehman brothers?
- alvis 4y agoAt times, it's not the size that matters, but rather the quantity that makes a chain reaction
- misja111 4y agoWhere are Lehman Brothers, Bear Sterns? And where are all the non US banks, such as e.g. Credit Suisse? They would make the other numbers in this graph dwindle ..
- Tempest1981 4y agoFDIC data only, but yes
- pjc50 4y agoThey're not in the set of US depositor banks. (Lehman was an investment bank)
- cyclecount 4y agoLehman Brothers and Bear Stearns were non-FDIC insured investment banks.
- bilekas 4y agoI’m not familar with all the recent banks that are failing but is it a result of consolidation during the 2007 crisis? Seems really strange visually at least
- bighoki2885000 4y ago[dead]
- MrQuincle 4y agoMakes me think of firebreaks. What are the equivalents of firebreaks in the sector?
- crimsoneer 4y agoThe Fed acting as a backstop, essentially (like they did after Lehman in 2008)
- alex-moon 4y agoWonder what year that massive spike is. Oh no, can't zoom in on mobile! Guess I'll have to check later on my desktop, if I remember. Until then, it is a mystery.
- HatchedLake721 4y agoI can zoom in on an iPhone. It’s 2008/2009
- dandare 4y agoThe "Bank failures" title is misleading, when only FDIC banks failures are included.
- sam_goody 4y agoAnd now that the fed said they will only "fully" back depositors in large banks that go under, there will be even more consolidation, so the next crash can consist of just one huge circle that acted gregariously and irresponsibly before its collapse, but no one could do anything because of its size. What makes this even worse, is that Yellen would have lost nothing had she said they would back every bank and not just large banks - small bank failures are just not that common, and the risk is low, (and can be walked back in two years when the tension lowers). Even worse, well over half of the SVB bailout went to <20 accounts. IMO, they should have raised the amount that FDIC is insuring, which is unquestionably too low. [They still should do that.] They then should have insured everyone equally up to that point. And if Circle and Roku would lose 90% of their value from such a move, that beats the whole banking system consolidating into one or two massive players that can act with impunity. OK, I am not an economist, and admit that I probably don't know what I am talking about, but HN is full of smart people with domain knowledge. Please (gently) broaden my perspective.
- penguinten 4y ago> Even worse, well over half of the SVB bailout went to <20 accounts. Do you have a source for this?
- sam_goody 4y agoI don't have time to research now, but there were some well detailed breakdowns of the large payments when the bailout happened. The first relevant link in DDG is a statement by the Chairman of the FDIC. He claims that the top ten accounts held more than 13.3B between them, which is more than 10% of the total of all deposits in the bank, and more than half of the $20B that the government is expected to payout in total. [1][2] The FDIC would otherwise have had to pay a scant 3M of that, so there's 2/3 of the bailout just in those 10 accounts. If we include the next ten accounts, it will be much, much more. (One of the articles at the time claimed more than 85% went to 15 accounts, but I didn't want to be extreme without time to research sources.) [1]: https://www.banking.senate.gov/imo/media/doc/Gruenberg%20Testimony%203-28-23.pdf https://www.banking.senate.gov/imo/media/doc/Gruenberg%20Tes... [2]: https://www.fdic.gov/news/press-releases/2023/pr23023.html https://www.fdic.gov/news/press-releases/2023/pr23023.html
- 99112000 4y agoNow plot it relative to the money supply :D
- wufufufu 4y agoCan someone explain why this is being downvoted?
- vrglvrglvrgl 4y ago[dead]
- daliz 4y agoThe world is changing. And that's good news.
- ofgod54 4y ago[dead]
- alkonaut 4y agoThis honestly looks much less frightening that I would have thought. But then my experience of '08 was "that wasn't so bad?" which I understand is highly regional. Visited some colleagues in 2015 in the UK who kept referring to "the recession" when talking about struggling customers or abandoned buildings. I had to ask whether they had experienced another recession or whether they still meant the 2008 one...
- itsthecourier 4y agoWhere is Lehmann Brothers there?
- torcete 4y agoOk, this must be a silly question but... What programming language/library is that? I am used to R + ggplot2 and I am aware that are quite a variety of other tools out there. In this case I unable to identify which one he is using.
- virtuallyvivek 4y agoJavaScript and the library is Observable Plot Link: https://observablehq.com/plot/ https://observablehq.com/plot/
- aketchum 4y agoThe person who wrote this blog also wrote the very popular and famous D3 visualization library for Javascript. It also looks like this is javascript from the code.
- torcete 4y agoAh, thanks. I can see it is also based on the grammar of graphic. Neat!
- WillAdams 4y agoI only saw a couple of entries which might have been credit unions --- were they intentionally excluded? Or are they that much less likely to fail?
- herbcso 4y agoCredit Unions aren't FDIC insured, which is what this data set is using.
- everybodyknows 4y agoExcellent point. To Joe Consumer, bank vs credit union accounts are ready alternatives. Where might one find data on failures? A quick scan of this site offered no clues. https://ncua.gov/ https://ncua.gov/ Insurance blurb from NCUA: https://ncua.gov/files/publications/guides-manuals/NCUAHowYourAcctInsured.pdf https://ncua.gov/files/publications/guides-manuals/NCUAHowYo... They do have access to a high-margin business, "temporaily": https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/permissible-loan-interest-rate-ceiling-extended-2 https://ncua.gov/regulation-supervision/letters-credit-union... Lending at up to 18% is permitted.
- stuff4ben 4y agoIs it me, or does this kind of illustrate that the banking industry doesn't know what it's doing and cannot be trusted in the future? I don't know what the answer is, but these "fat cats" running banks really aught not to.
- conradev 4y agoThe graph seems to be in nominal dollars, but I feel like real dollars is the only way to get an accurate comparison of magnitudes
- boringg 4y agoWay easier to diagnose & save 3 banks than the multitudes in 2008 from a time spent analysis perspective (wether or not we should is a different matter). The question is the ripple effect here - it seems to have stemmed 3 large breaches where as in 2009 it was death by a thousand cuts (with some large breaches).
- chunk_waffle 4y agoSo we're supposed to just go about our day, anxiety free, after seeing this?
- abeppu 4y agoMike Bostock knows far more about data visualization than I do so I assume there are good reasons for choosing this presentation. But it strikes me as hard to think about, so I must ask: when is stacked+packed circles a good choice? The drawbacks to me seem to be: - At any given point on the x-axis, the associated height of the pile is partly taken up by circles but is partly space lost to circle packing. This proportion is hard to estimate visually. - Because circles extend in the x-direction, they contribute to height over a _variable_ time range. E.g. WaMu is still the tallest circle at the 2010 line. It's a bit like a kernel density plot where the _kernel_ is data dependent. Because of these effects taken together, though it's tempting to think of the profile of the pile as a smoothed average of the rate of bank-failures, but this is pretty misleading, which I suppose is why there's no labeled y-axis.
- reylas 4y agoThe way I understand the graph is that is not the "number" of circles, but the area (money) that they consume. So those three bank failures are taking up the same space as all those other failures from 2008. It is the total volume of money involved vs the count. The height of both stacks show just how much damage three did vs all the others in the left hand stack.
- abeppu 4y agoYeah I get the count vs area distinction, but I think the point would have been more cleanly communicated with e.g. a stacked barchart with failures by quarter. With circles, the filled area over any span of the x-axis is not solely due to failures which happened during the corresponding time period. So the area above a short span in early 2010 includes area contributed by WaMu, which happened in Sept 2008.
- rout39574 4y agoMy read of it was that the circles are centered on the date of the failure, and the stacking was some flavor of minimum height. The result is you get an approximation of "area under the curve" of bank value that has failed, while retaining a sense of whether a particular peak was a few large actors, or a mound of tiny. I find that clear distinction valuable. The nice thing about Mike having posted the code is that, if you think there's a better way to portray it, the canvas is spread out before you. :)
- Luciatrutth 4y ago[dead]
- hattmall 4y agoWhy so many in Georgia? Roughly 25% of all bank failures were in a state with less than 3% of population? Subprime lending?
- majormajor 4y agoI've seen a bit of discussion about concerns around office property mortgage and such (e.g. JP Morgan wanting to be insulated about losses on outstanding loans) for FRB which seem concerning as a post-Covid systemic risk. I wonder if the consumer deposit side, though, has a lot to do with an unanticipated risk of the particular business model SVB and FRB were using: higher-income people. Sounds great - less risk of defaulting on loans - but then you are highly-concentrated in larger deposits for a smaller total population (larger meaning less insured, so easier to spook; smaller population means the panic doesn't have to spread as far)... so it works well for decades and is seen as something to aspire to... until it suddenly doesn't.
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- danlugo92 4y agoGreat, the more the system cracks the sooner the veil will come down.