Nearly 200 banks at risk for same fate as SVB: study

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ExpressLane

Verified User
Nearly 200 more banks may be vulnerable to the same type of risk that took down Silicon Valley Bank: The value of the assets they hold.

There are 186 banks across the country that could fail if half of their depositors quickly withdraw their funds, a new study published on the Social Science Research Network found.

Even insured depositors — those with $250,000 or less in the bank — could have problems getting their cash if these institutions face the sort of run that Silicon Valley saw a week ago.

The concern is that these banks hold a significant amount of their assets in interest-rate sensitive financial instruments like government bonds and mortgage backed securities. The value of those older, low-interest investments dropped sharply as the Federal Reserve hiked interest rates over the past
year.

In the case of SVB, the Santa Clara, California-based institution parked much of its cash in long-term government bonds, which are ultra-safe in terms of losing the initial investment, but were not worth as much as when SVB bought them, because interest rates have since gone higher. The bank had to sell off some of those bonds to meet customer demands for withdrawals at less than it paid for them, resulting in a nearly $2 billion loss......


https://nypost.com/2023/03/18/nearly-200-banks-could-fail-the-same-way-svb-did-study/
========================

This whole collapse of SVB could be the tip of the iceberg.
 
ExpressLane said:
Nearly 200 more banks may be vulnerable to the same type of risk that took down Silicon Valley Bank: The value of the assets they hold.

There are 186 banks across the country that could fail if half of their depositors quickly withdraw their funds, a new study published on the Social Science Research Network found.

Even insured depositors — those with $250,000 or less in the bank — could have problems getting their cash if these institutions face the sort of run that Silicon Valley saw a week ago.

The concern is that these banks hold a significant amount of their assets in interest-rate sensitive financial instruments like government bonds and mortgage backed securities. The value of those older, low-interest investments dropped sharply as the Federal Reserve hiked interest rates over the past
year.

In the case of SVB, the Santa Clara, California-based institution parked much of its cash in long-term government bonds, which are ultra-safe in terms of losing the initial investment, but were not worth as much as when SVB bought them, because interest rates have since gone higher. The bank had to sell off some of those bonds to meet customer demands for withdrawals at less than it paid for them, resulting in a nearly $2 billion loss......


https://nypost.com/2023/03/18/nearly-200-banks-could-fail-the-same-way-svb-did-study/
========================

This whole collapse of SVB could be the tip of the iceberg.
Click to expand...

Terrifying prospect, so much for Dodd-Franks!
 
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ExpressLane said:
Nearly 200 more banks may be vulnerable to the same type of risk that took down Silicon Valley Bank: The value of the assets they hold.

There are 186 banks across the country that could fail if half of their depositors quickly withdraw their funds, a new study published on the Social Science Research Network found.

Even insured depositors — those with $250,000 or less in the bank — could have problems getting their cash if these institutions face the sort of run that Silicon Valley saw a week ago.

The concern is that these banks hold a significant amount of their assets in interest-rate sensitive financial instruments like government bonds and mortgage backed securities. The value of those older, low-interest investments dropped sharply as the Federal Reserve hiked interest rates over the past
year.

In the case of SVB, the Santa Clara, California-based institution parked much of its cash in long-term government bonds, which are ultra-safe in terms of losing the initial investment, but were not worth as much as when SVB bought them, because interest rates have since gone higher. The bank had to sell off some of those bonds to meet customer demands for withdrawals at less than it paid for them, resulting in a nearly $2 billion loss......


https://nypost.com/2023/03/18/nearly-200-banks-could-fail-the-same-way-svb-did-study/
========================

This whole collapse of SVB could be the tip of the iceberg.
Click to expand...

Just the thought of those potential failures must get your panties very wet, handjob. You year for total economic destruction!
 
ExpressLane said:
Nearly 200 more banks may be vulnerable to the same type of risk that took down Silicon Valley Bank: The value of the assets they hold.

There are 186 banks across the country that could fail if half of their depositors quickly withdraw their funds, a new study published on the Social Science Research Network found.

Even insured depositors — those with $250,000 or less in the bank — could have problems getting their cash if these institutions face the sort of run that Silicon Valley saw a week ago.

The concern is that these banks hold a significant amount of their assets in interest-rate sensitive financial instruments like government bonds and mortgage backed securities. The value of those older, low-interest investments dropped sharply as the Federal Reserve hiked interest rates over the past
year.

In the case of SVB, the Santa Clara, California-based institution parked much of its cash in long-term government bonds, which are ultra-safe in terms of losing the initial investment, but were not worth as much as when SVB bought them, because interest rates have since gone higher. The bank had to sell off some of those bonds to meet customer demands for withdrawals at less than it paid for them, resulting in a nearly $2 billion loss......


https://nypost.com/2023/03/18/nearly-200-banks-could-fail-the-same-way-svb-did-study/
========================

This whole collapse of SVB could be the tip of the iceberg.
Click to expand...

All thanks to Trump deregulating them back in 2018. He's the curse that keeps on damaging.
 
serendipity said:
Terrifying prospect, so much for Dodd-Franks!
Click to expand...

Trump defanged Dodd-Frank. Had he not done that, SVB would have been under much closer scrutiny. You didn't know this, did you? How sad.

The idea that half the customers of a bank are going to run the bank is laughable. Bank runs happen because stupid people panic. Not because of Dodd-Frank. Stick to trolling, your attempts at fact based posting are miserable failures.
 
serendipity said:
Terrifying prospect, so much for Dodd-Franks!
Click to expand...

I preface my comment by saying I’m not a banker nor do I operate in that world so I’m not trying to pass myself off as some expert here. But I’ll state what I understand.

This isn’t really about Dodd-Frank. The issue with Dodd-Frank was it hurt small and medium banks because they couldn’t afford the mountain of attorneys and accountants the big banks could to comply with all the new regulations. Thus the bi-partisan 2018 legislation that pushed back some of the regulations on medium and smaller banks.

I know someone at Forbes wrote an article claiming it was the cause and you have people latching onto that position but it’s just not the case. A lot has been written that the stress tests Dodd-Frank required would not have prevented this here.

There were several factors that caused it and that’s a separate discussion.
 
cawacko said:
I preface my comment by saying I’m not a banker nor do I operate in that world so I’m not trying to pass myself off as some expert here. But I’ll state what I understand.

This isn’t really about Dodd-Frank. The issue with Dodd-Frank was it hurt small and medium banks because they couldn’t afford the mountain of attorneys and accountants the big banks could to comply with all the new regulations. Thus the bi-partisan 2018 legislation that pushed back some of the regulations on medium and smaller banks.

I know someone at Forbes wrote an article claiming it was the cause and you have people latching onto that position but it’s just not the case. A lot has been written that the stress tests Dodd-Frank required would not have prevented this here.

There were several factors that caused it and that’s a separate discussion.
Click to expand...

The usual suspects want to blame Trump even though it was a bipartisan initiative in 2018, as you quite rightly state, to push back some of the more onerous aspects of Dodd-Frank.
 
serendipity said:
The usual suspects want to blame Trump even though it was a bipartisan initiative in 2018, as you quite rightly state, to push back some of the more onerous aspects of Dodd-Frank.
Click to expand...

A minority of Dems in both the House & Senate, actually. And the legislation came about because of Trump's recommendation.
 
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